Having an Arkansas LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Arkansas.
On this page, you’ll learn about the following:
- How to Start an LLC in Arkansas
- After Starting your Arkansas LLC
- Arkansas Foreign LLC
- Why an LLC in Arkansas
- Arkansas LLC Formation Review
How to Start an LLC in Arkansas
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an Arkansas LLC.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Arkansas, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Arkansas business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face many issues by avoiding focus on choosing a business name for their LLC business formation filings.
Here are some of the major benefits of choosing the best LLC names.
- Helps establish a company’s presence in the market;
- Creates a new identity that will resemble your LLC;
- Allows ease in finishing your LLC registration process;
- You can get the EIN once you have your name registration certificate
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Arkansas. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Arkansas. The cost of a name reservation is $22.5 (online) and $25 (by mail).
Important Quick Links:
Secretary of State
Attn: Business and Commercial Services Division
1401 W. Capitol Street, Suite 250
Little Rock, AR 72201
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Step 2: Assign a Registered Agent in Arkansas
A registered agent for service is your authorized person or business entity that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Arkansas. Choosing Arkansas registered agents for your LLC is required.
Make sure your registered agent is a resident of Arkansas. It could also be a business. Here are the recommended registered agent service provides to consider:
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Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Arkansas. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Arkansas
A Certificate of Name Reservation is needed to file your Arkansas Certificate of Organization or what is also called Articles of Organization, as other states call it. You need to make reports of this certificate with the Arkansas Secretary of State. You may file them online or by mail for $45 and $50, respectively. These fees make up the majority of the LLC cost in Arkansas. That is topped with other expenses, of course.
This Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Arkansas, like if it is a member-managed or managers-managed.
Before you start filing your forms, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Arkansas LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. To know more about online filing, visit the Arkansas Certificate of Formation.
How to File by Mail
If you prefer filing real-life forms for your Arkansas LLC registration, then you can download the Arkansas Limited Company Certificate of Formation form. Please read the form thoroughly and fill it out. It will have to fill, among others, your name, city, state, zip code, and signature. You may also file in person by visiting the office on business days.
Mail To: Arkansas Secretary of State
1401 W. Capital Ave.
Little Rock, AR 72201
Step 4: Create Your Arkansas LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship or partnership and operating procedures of your LLC. This internal document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
You are not required to have a comprehensive LLC operating agreement in Arkansas when starting an LLC, but it is ideal to have one that contains all the details of your business operation. This document would be useful if you decide to dissolve Arkansas LLC later.
Step 5: Filing a Arkansas LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Arkansas LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Arkansas LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Arkansas business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Arkansas LLC annual report or biennial report
- Already existing LLCs that wish to operate in Arkansas must register as Arkansas foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Arkansas Foreign LLC
To register an Arkansas foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Arkansas. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Arkansas Foreign LLC to know more about having a foreign LLC.
Why an LLC in Arkansas
Arkansas ranked 8th in the State Business Tax Climate Index and 5th for the cost of living. Currently, the state has 36,000 active LLCs, including domestic and foreign. Along with various tax benefits, Arkansas has a few more factors that are certainly beneficial to start an LLC there.
Arkansas has a business-friendly atmosphere for LLCs. Over 7000 LLCs are formed in a year in Arkansas. The state has earned 5th position in the Nationwide index for cost of living and 8th rank for business tax climate.
- ArkPlus – Qualified businesses can get an income tax credit of up to 10% of the total capital investment under ArkPlus for specific projects. Depending on the employee payroll, the companies get qualified for the program.
- Advantage Arkansas Credit – Under this program, an income tax credit of up to 4% of the new-hire employee payroll can be received. This kind of credit will be available only if your company or business can generate full-time jobs in the state.
- InvestArk – Under this program, qualified companies can enjoy up to 7% of the total project expenditure as a credit. The LLCs, in this case, have to operate from within the state for at least a couple of years. This tax credit falls under Sales Taxes, and they are non-refundable taxes.
If your LLC has unused credits in Arkansas, it will be carried forward to the next year. Up to 9 years, the unused credits will be carried forward.
Removal of Unwanted Partners
According to the Arkansas LLC Act, filing members’ names are not mandatory at the time of formation. However, it is needed at the time of submitting the Annual Report, which is kept confidential. In this situation, even if the LLC agreement does not prohibit any member from participating, it does not allow them to participate as well. That means if the assignor wants, he/she can remove any partner without any hassle.
It is easy and cost-effective to start an LLC in Arkansas. Especially with so many benefits, you can smoothly start and operate LLC in Arkansas.
Best Business to Start in Arkansas
Are you about to form an LLC in Arkansas, then you must be known to the best and most profitable niches of Arkansas? If no, then you should go through the below-mentioned information to know the most profitable businesses.
The first niche that is contributing the most to the Arkansas GDP is poultry. Arkansas is known as the rural state of the United States Of America, due to which the opportunity of this farm-based business is very high. Arkansas is known to deliver poultry-based products to most of the country’s states and nearby countries also. If someone is interested in living in remote areas and wants to work on farms, then this is the best option.
The next business is the agricultural business which is also one of the biggest farm-based businesses. The crops grown the most in Arkansas state are soybean, corn, millets, sorghum, wheat, cotton, etc., which are required for a healthy human diet. The industry has many businesses established, but the increasing demands make more business spaces enter the field and show their talents.
Along with producing these products, there is an option of opening up a manufacturing unit where one can process this raw material. It will increase the value of raw grains from a customer point of view and profits from a business perspective.
Construction Equipment and Machinery
The construction business is also on a hike in Arkansas state. Those who don’t know the fact should know that Arkansas is the first producer of construction equipment used for heavy-duty work and is still a milestone in the field. That is why people still trust the machinery made in Arkansas, making it a profitable business option.
Some small business opportunities an individual can grab are:-
- Digital businesses (Home-based)
- Restaurant business
- Daycare services
Arkansas LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in Arkansas. Click on the steps in this list to read the full detail.
- Name your Arkansas LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In Arkansas, it is mandatory to select a registered agent for service for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Arkansas
If you’re wondering “How fast can I form an LLC in Arkansas?” then you’ve come to the right place. The state of AR has made the process of setting up an LLC easy, and there are a few simple steps to follow to ensure your business is set up correctly. In addition, you can get a free operating agreement PDF from TRUiC. These agreements cover the most common setups for single-member LLCs, and are useful for tax reporting.
Before you file for an LLC in Arkansas, you’ll need to choose a business name for your new company. Your name will be your identity and reputation. It’s important to pick a name that’s unique and memorable to attract new customers and retain existing ones. Your name will appear on everything from your business card to your website, so it’s important to find one that represents your brand and message. While it’s tempting to get creative and innovative, be sure to follow the state’s requirements.
If you’re looking for a fast and easy way to incorporate your new business in Arkansas, you’ll need a bank kit. Your bank kit is the most important document for setting up a business. It must contain a bank account and other business documents. These documents should also be certified by the Secretary of State to ensure they’re accurate. In most cases, the state will approve your LLC application within three business days.
If you are a resident of Arkansas, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $50 (domestic LLC) and $300 (foreign LLC), LLC costs in Arkansas include $150 for Franchise Tax every year. LLCs are liable to pay sales tax of 6.5% every year
It takes 48 hours to get an Arkansas LLC if you file it online. For the mail filing, it takes 7 business days to get an LLC.
Every year all the LLC have to submit an Annual Report and pay $150 (Franchise Tax) to the Arkansas Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.