How to Start an LLC in Arkansas: A Complete Guide
Those looking to start a business in Arkansas have a few different options for the type of business that they file. An LLC, or Limited Liability Corporation, can be used for business operations. In the state of Arkansas, it can also be used as a designation to hold high-value assets like boats, real estate, and aircraft. The process of forming an LLC in Arkansas is not a difficult one, provided that you know what is expected of you.
What is an LLC?
A Limited Liability Company is a specific type of legal structure that can be formed for business operation or asset protection. The reason for forming this type of entity is to protect personal assets in the event of a lawsuit. There are a few different elements to an Arkansas LLC, including certain steps you need to take in the formation process, to make sure that yours is set up properly. To save time and skip the confusion, you can always hire professionals to help form your LLC or other business entity.
If you wish to proceed with setting up your own entity, here are some important tips on how to form an LLC in Arkansas.
1. Registering Your Business
The first thing that you need to do when you decide to form an LLC is to choose a business name or entity. Then, you will need to perform an Arkansas LLC search to ensure that the name is not already in use. Once you have confirmed that, you can register your preferred business name with the state. Along with the name you choose, you much choose the way that “LLC is displayed on your business name. Acceptable options include:
- Ltd. Liability Co.
- Limited Liability Co.
- Ltd. Liability Company
- Limited Liability Company
2. Registered Agent(s)
You will also need to select a Registered Agent. This is the individual responsible for receiving legal mail and court documents in the event that a lawsuit is filed against the company. They will also be responsible for the Arkansas LLC business mail that you receive. The business owner can designate themselves, choose a friend or family member, or even hire and appoint a Commercial Registered Agent.
Your registered agent must:
- Be at least 18 years of age and a resident of the state
- Have a physical street address within the state of Arkansas
- Be available from 9 AM to 5 PM at the registered address to receive any documents that need to be “served”
P.O. boxes are not allowed to be registered.
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3. Filing Forms and Business Documents
Once you have registered your name and chosen an agent, you will need to file the Articles of Organization for your business. The Arkansas Secretary of State LLC website has all the information that you need on how to complete this process, including the option to file online or register by mail. You can download a PDF from the Secretary of State site if you prefer to send in a paper document.
Mailed-in forms will be approved in 1-2 weeks, while online approvals can be completed in just 2-3 days. Once approved for your LLC Arkansas, you will receive an approved, stamped copy of the Articles of Organization that you filed.
You can also choose to hire someone to file all of the documents for your business, including the Articles of Organization. Not only will it save you time, but you will be able to trust that everything was filed accordingly within the requirements of the law.
4. Fees and Costs
Arkansas LLC One-Time Filing Fee: $45.00-$50.00
Annual LLC Fees: $150.00
Name Reservation Fee: $22.50-$25.00
The price variance reflects filing online versus traditional paper filing costs.
5. Operating Agreement
Another important step in learning how to start an LLC in Arkansas is completing the Operating Agreement. This document is essentially the “control document”, or guidelines for your LLC operation. It will outline all of the rules of the business, the duties and obligations of the owners (also known as Members), and the management structure of the LLC. This is also where you will designate how many Members you have and what percentage of the business they own. This can be a single person or multiple people, but it needs to be explicitly stated in this document.
Important tips and reminders:
- This is an internal document. That is, you don’t need to send copies to the IRS, Secretary of State, or any other agencies.
- Every Member of the LLC gets a copy and you should file one or two copies along with the business records.
- Single-owner LLCs can still benefit from an Operating Agreement. In a legal situation, this document can serve as proof that the LLC is being properly run as a separate entity.
- This document clearly defines roles, ownership percentages, and rights of members, and will be essential to the success of a Multi-Member LLC.
- You can find templates and sample Operating Agreement documents online, or again you can hire a professional to complete this (and all of your other LLC startup paperwork) for you.
6. EIN (Federal Tax ID Number)
Once your application has been approved by the state of Arkansas, you can apply for a Federal Tax ID Number, also sometimes called an EIN or FEIN. You can apply online or via mail or fax, and filing for an EIN is free. Online applications are approved instantly, while faxes take about four business days and mailed forms will require around four weeks for approval.
Why do you need an EIN?
- It makes your LLC distinguishable and searchable for the purposes of filing and taxes
- It allows you to apply for permits and licenses for the business
- It allows you to set up bank accounts in the business name and handle payroll taxes
Important: If you do not have an individual SSN or are forming an LLC through an existing company, you cannot file for an EIN online. You must complete Form SS-4 and return it by fax or postal mail.
7. Annual LLC Franchise Tax Report
Every LLC in Arkansas is required to submit an annual report, regardless of their business activity or income level. There is also a $150 flat-rate tax that must be paid each year that the LLC is in operation. This can be filed online or via postal mail and is due by May 1st of each calendar year.
Processing for online applications is completed within 24 hours. Mailed applications will take 2-6 weeks to process. Late filing will result in an initial $25 penalty, with interest accruing daily thereafter.
8. Other LLC Formation Considerations
Like a lot of the states in the U.S., Arkansas doesn’t have a basic “umbrella” business license. Most of the licensing and permit requirements for LLCs and other businesses fall under county and city jurisdiction. There may also be some regulatory agencies that require special permits for certain industries, such as a liquor license or tobacco permit.
With almost 20,000 permit and licensing jurisdictions in the country, it can be confusing to navigate this step of starting a business. Hiring a professional service company will make it easier. They can handle researching what permits are required and even prepare the applications for you. Then, you just need to submit the information and wait for the approval.
Once your LLC is approved and you have obtained a Federal Tax ID Number, you can open a bank account for your business. You need this account to keep your personal assets separate from those of the LLC and reduce your personal liability in the event of a financial issue. This also makes it easier to manage the finances for your LLC.
Requirements vary by bank, so be sure to inquire about what documents will be required to open an account with the banks that you consider. As a general rule, you should bring:
- Your Federal Tax ID Number
- An approved, stamped copy of the LLC’s Articles of Organization
- Two forms of (valid) ID, such as a driver’s license or passport
The bank can advise as to other acceptable forms of identification, as well as any additional paperwork they may need to complete the initial account opening. You should take any authorized account signer(s) with you, as the bank will likely need their information. Debit cards can be issued for all account signers.
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Benefits of Hiring Professional Services for LLC Formation
Although the state of Arkansas strives to make it simple to navigate the process of starting a business within the state, there are a lot of steps, details, and elements involved in the process. It can be confusing for first-time business owners and that confusion could lead to costly mistakes. If you hire someone to handle setting up and filing your LLC formation in Arkansas, you won’t have to worry about any of this. Don’t forget to check out our California LLC guide next.
- You will have an expert handling every aspect of setting up your LLC, including providing you with valuable advice about LLC formation and ongoing operations.
- You won’t have to worry about forgetting any steps or missing any important applications or startup fees.
- The process is usually quicker and involves less hassle because the person you hire has done this plenty of times before.
- You will be able to focus on the other aspects of starting your business that need your attention.
Important Contact Information
Arkansas Secretary of State: http://www.sos.arkansas.gov
State Capitol, Suite 256
500 Woodlane Street
Little Rock, AR 72201
Business and Commercial Services Division
Phone: 501-682-3409 or toll-free 888-233-0325
Email: [email protected]
Department of Finance and Administration (Taxes and Business Services)