How to Start a Limited Liability Partnership in Arkansas | 2024 Guide

Start a Limited Liability Partnership in Arkansas

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Arkansas. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Arkansas, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Arkansas LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Arkansas, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Arkansas General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Arkansas

To form a limited liability partnership in Arkansas, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Certificate of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Arkansas, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Arkansas business registry. Ensure that your chosen name follows Arkansas naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Arkansas Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Arkansas- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Arkansas Secretary of State business name database and Arkansas Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $22.50 and mail name reservation fee of $25. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by three methods, online, by mail, and in person filing, which costs around $22.50 for filing online, $25 for filing by mail or in-person. In addition, the DBA’s validity in Arkansas is Indefinite, which you can file in the Arkansas Secretary of State.

You can check out how to file a DBA in Arkansas for clearer understanding.

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Step 3: Designate a Registered Agent

In Arkansas, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Arkansas Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet Arkansas requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Arkansas Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Arkansas Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Arkansas laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Arkansas. The default laws in Arkansas might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Arkansas Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Arkansas Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Arkansas.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Arkansas LLP. Additionally, obtain the necessary Arkansas Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Arkansas to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Arkansas Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Arkansas, and local levels.

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Advantages of Forming a Limited Liability Partnership in Arkansas

While the specific advantages of forming an LLP in Arkansas can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Arkansas:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Arkansas.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Arkansas may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Arkansas.

Cost of Forming an LLP in Arkansas

The cost of forming an LLP in Arkansas may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Arkansas Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Arkansas instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership in Arkansas?
A limited liability partnership in Arkansas is a business structure that protects partners’ personal assets from the business’s debts and liabilities.
What are the requirements for starting a limited liability partnership in Arkansas?
In Arkansas, you must file a Certificate of Limited Liability Partnership with the Arkansas Secretary of State’s office to create a limited liability partnership.
How many partners are required to form a limited liability partnership in Arkansas?
In Arkansas, at least two partners are required to form a limited liability partnership.
Can a limited liability partnership in Arkansas have a single owner?
No, a limited liability partnership in Arkansas requires at least two partners.
Is there a fee to file the Certificate of Limited Liability Partnership in Arkansas?
Yes, the fee to file the Certificate of Limited Liability Partnership in Arkansas is $50.
How much does it cost to start a limited liability partnership in Arkansas?
The cost to start a limited liability partnership in Arkansas depends on various factors such as legal fees, filing fees, and startup costs.
Is there a residency requirement for partners in a limited liability partnership in Arkansas?
No, there is no residency requirement for partners in a limited liability partnership in Arkansas.
Is there a need for a registered agent for a limited liability partnership in Arkansas?
Yes, a limited liability partnership in Arkansas is required to have a registered agent.
Can a partner also serve as the registered agent for a limited liability partnership in Arkansas?
Yes, a partner can serve as the registered agent for a limited liability partnership in Arkansas.
Are limited liability partnerships in Arkansas required to file an annual report?
Yes, limited liability partnerships in Arkansas are required to file an annual report with the Arkansas Secretary of State’s office.
What is the deadline for filing an annual report for a limited liability partnership in Arkansas?
The deadline for filing an annual report for a limited liability partnership in Arkansas is May 1 of each year.
What information is required in an annual report for a limited liability partnership in Arkansas?
The annual report for a limited liability partnership in Arkansas must include the name and mailing address of all partners and the business’s principal office address.
Is it possible to file an annual report online for a limited liability partnership in Arkansas?
Yes, you can file an annual report online for a limited liability partnership in Arkansas.
How much is the fee for filing an annual report for a limited liability partnership in Arkansas?
The fee for filing an annual report for a limited liability partnership in Arkansas is $150.
What is the tax structure for a limited liability partnership in Arkansas?
Limited liability partnerships in Arkansas are not taxed at the entity level. Instead, the individual partners are responsible for paying taxes on their share of the partnership’s income.
Do limited liability partnerships in Arkansas require a business license or permit?
It depends on the type of business. Some businesses in Arkansas require a license or permit to operate. You should check with the relevant authorities to know more.
Is there a requirement for annual meetings of partners in a limited liability partnership in Arkansas?
No, there is no requirement for annual meetings of partners in a limited liability partnership in Arkansas.
What type of liability protection does a limited liability partnership in Arkansas offer?
A limited liability partnership in Arkansas protects partners from personal liability for the business’s debts and obligations.
Are there any personal asset requirements to start a limited liability partnership in Arkansas?
There are no personal asset requirements to start a limited liability partnership in Arkansas.
How soon can a limited liability partnership start doing business in Arkansas after filing the Certificate of Limited Liability Partnership?
You can start doing business in Arkansas as soon as you receive the certificate of limited liability partnership, often within a few days of filing.
Can I convert an existing business to a limited liability partnership in Arkansas?
Yes, you can convert an existing business to a limited liability partnership in Arkansas by filing a Certificate of Conversion.
Is a limited liability partnership in Arkansas a separate legal entity?
Yes, a limited liability partnership in Arkansas is a separate legal entity from its partners.
Can a limited liability partnership in Arkansas own property?
Yes, a limited liability partnership in Arkansas can own property in its name.
Can a partner in a limited liability partnership be held personally liable in Arkansas?
Yes, partners in a limited liability partnership in Arkansas can be held personally liable for their own negligent acts or misconduct.
Are partnership agreements required for a limited liability partnership in Arkansas?
No, partnership agreements are not required for a limited liability partnership in Arkansas, but it is strongly recommended to have one.
What are the benefits of forming a limited liability partnership in Arkansas?
The benefits of forming a limited liability partnership in Arkansas include personal asset protection, flexible management structure, and pass-through taxation.
Are there any downsides of forming a limited liability partnership in Arkansas?
Forming a limited liability partnership in Arkansas may increase paperwork obligations and formalities over a sole proprietorship or general partnership.
Which other entity options are available in Arkansas besides a limited liability partnership?
Other entity options available in Arkansas include sole proprietorship, general partnership, limited partnership, limited liability company, and corporation.
Can I get legal assistance in forming a limited liability partnership in Arkansas?
Yes, many law firms and online legal services can assist you in forming a limited liability partnership in Arkansas.
What is a limited liability partnership (LLP) in Arkansas?
An LLP is a type of partnership in which the partners have limited liability for the partnership’s debts.
How is an LLP formed in Arkansas?
To form an LLP in Arkansas, you must file a certificate of limited liability partnership with the Secretary of State.
What are the advantages of forming an LLP in Arkansas?
The main advantage of forming an LLP in Arkansas is that the partners have limited liability for the partnership’s debts.
What are the disadvantages of forming an LLP in Arkansas?
The main disadvantage of forming an LLP in Arkansas is that it can be more expensive and complex than other forms of partnerships.
What other types of partnerships can I form in Arkansas?
In addition to LLPs, you can form general partnerships and limited partnerships in Arkansas.
Can I form an LLP myself, or do I need to hire an attorney?
While you can file the paperwork to form an LLP yourself, it’s recommended to consult with an attorney to ensure you’ve met all legal requirements.
What are the tax implications of forming an LLP in Arkansas?
LPs in Arkansas are treated as pass-through entities for tax purposes, meaning the income and losses of the partnership are reported on the partners’ personal tax returns.
Do I need to file an annual report for my LLP in Arkansas?
Yes, LLPs in Arkansas must file an annual report with the Secretary of State to remain in good standing.
Can I change the name of my LLP in Arkansas at any time?
Yes, you can change the name of your LLP in Arkansas by filing the appropriate paperwork with the Secretary of State.
How many people can be in an LLP in Arkansas?
There is no limit to the number of people who can be in an LLP in Arkansas.
Is there a minimum number of partners required to form an LLP in Arkansas?
Yes, an LLP in Arkansas must have at least two partners.
Can an LLP be dissolved in Arkansas?
Yes, an LLP can be dissolved in Arkansas by filing a statement of dissolution or certificate of cancellation with the Secretary of State.
Are partners personally liable for the malpractice of another partner in an LLP in Arkansas?
In Arkansas, each partner is only liable for their own malpractice and not for the malpractice of other partners.
Can an LLP in Arkansas be converted to a different type of legal entity?
Yes, an LLP in Arkansas can be converted to a different type of legal entity by filing the appropriate paperwork with the Secretary of State.
Are there residency requirements for partners in an LLP in Arkansas?
There are no residency requirements for partners in an LLP in Arkansas.
Can I convert a general partnership to an LLP in Arkansas?
Yes, you can convert a general partnership to an LLP in Arkansas by filing the appropriate paperwork with the Secretary of State.
Can I conduct business under a different name than my LLP in Arkansas?
Yes, you can conduct business under a different name than your LLP by filing a “Doing Business As” (DBA) with the Secretary of State.
Is it necessary to obtain a business license to start an LLP in Arkansas?
Whether or not you need a business license to start an LLP in Arkansas depends on the specific industry and location of your business.
Are there annual filing requirements for LLPs in Arkansas?
Yes, LLPs in Arkansas must file an annual report and pay a fee to the Secretary of State.
Can a non-US resident form an LLP in Arkansas?
Yes, a non-US resident can form an LLP in Arkansas as long as they meet all the requirements.
Can I change the partnership agreement for my LLP in Arkansas?
Yes, the partnership agreement for an LLP in Arkansas can be changed at any time with the consent of all partners.
Can I use a trademarked name for my LLP in Arkansas?
No, you cannot use a trademarked name for your LLP in Arkansas as it violates federal trademark laws.
Are LLPs in Arkansas required to have a registered agent?
Yes, LLPs in Arkansas must have a registered agent who can receive legal and other important documents on behalf of the LLP.
How long does it take to form an LLP in Arkansas?
The time it takes to form an LLP in Arkansas depends on the complexity of the partnership and how quickly the paperwork is filed.
What is the cost of starting an LLP in Arkansas?
The cost of starting an LLP in Arkansas includes a $50 filing fee and an annual report fee charged by the Secretary of State.
Are the rights and obligations of each partner in an LLP in Arkansas equal?
Typically, the rights and obligations of partners in an LLP in Arkansas are spelled out in the partnership agreement and can vary from partner to partner.
Can a partner in an LLP also be an employee of the partnership in Arkansas?
Yes, partners in an LLP can also be employees of the partnership in Arkansas.
What happens if a partner wants out of the LLP in Arkansas?
If a partner wants out of an LLP in Arkansas, they must make it known in writing and follow the procedures in the partnership agreement.

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Conclusion

Starting an LLP in Arkansas may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Arkansas.

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