How to Start an LLC in Arkansas | 2024 Guide

Start a LLC in Arkansas

How to Start an LLC in Arkansas: If you’re looking to launch a business in Arkansas, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in Arkansas. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In Arkansas, an LLC must have a unique name and file Certificate of Organization with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in Arkansas

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Registered Agent, filing your Certificate of Organization, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in Arkansas

After you have decided on the idea to form an LLC in Arkansas, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Arkansas, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 120 days. You must file a name reservation application in Arkansas Secretary of State to keep the name.

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You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing Arkansas DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in three methods, online, by mail, and in person filing. However, before filing a DBA, you should know that you need to renew your DBA from up to Indefinite, which costs around $22.50 for filing online, $25 for filing by mail or in-person.

Step 2: Hire a Registered Agent in Arkansas

Hiring a Registered Agent in Arkansas is a must since a Registered Agent is a person or business entity responsible for receiving important legal documents on behalf of your Arkansas LLC. Most states require you to designate a Registered Agent when forming your LLC.

The qualifications of a Registered Agent vary depending on the jurisdiction. Still, generally, a Registered Agent must meet the following criteria:

  • Availability: A Registered Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Registered Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Registered Agent, they must be residents of the Arkansas where the LLC was formed. A business entity acting as a Registered Agent must be authorized to do business within that state.
  • Age: A Registered Agent must be at least 18 years old.
  • Good standing: A Registered Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Registered Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get Arkansas Registered Agent Services.

Step 3: File your Certificate of Organization in Arkansas

The Certificate of Organization for an LLC is an important document to start your limited liability company (LLC). Arkansas Certificate of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Certificate of Organization in Arkansas.

1. Obtain the Necessary Forms: Visit the Arkansas’s business filing office website, usually the Arkansas Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at Arkansas Secretary of State, 1401 W. Capital Ave., Suite 250, Little Rock, AR 72201.

4. Pay the Filing Fee: When you submit your Certificate of Organization, you’ll need to pay a filing fee of $50. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Certificate of Organization have been filed and processed, you’ll receive a confirmation from Arkansas, typically a stamped and approved copy of the document or a Certificate of Organization.

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Once you have successfully filed your Certificate of Organization and it has been approved, your Arkansas LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your Arkansas Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in Arkansas.

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Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in Arkansas. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Arkansas 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 the 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.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

ZenBusiness($0 + State Fee for LLC formation)

Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in Arkansas might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with Arkansas LLC.

Opening a bank account is necessary for Arkansas business. If you are still wondering where to open an account in your Arkansas, you should check the Best Bank for Small Business in Arkansas.

Step 7: Get a Business and License Permit

You must get a business license in Arkansas before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in Arkansas ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the Arkansas Secretary of State.

Cost to Form an LLC in Arkansas

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in Arkansas. Certificate of Organization costs around $50. The initial filing fee is $50, and the annual fee is $0 because it is not mandatory.

If you forget to pay the annual fee for your Arkansas LLC, you will have a penalty of $25. However, you can check the Arkansas LLC Cost for additional information.

Advantages of Creating Arkansas LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in Arkansas. Important benefits will help you set up an LLC in Arkansas.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in Arkansas apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in Arkansas with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in Arkansas can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in Arkansas will protect its assets.

FAQs

What is an LLC and why should I start one in Arkansas?
An LLC is a Limited Liability Company, a legal entity formed to protect personal assets of the owners. Arkansas allows LLCs to be formed with flexible management and tax benefits.
How do I form an LLC in Arkansas?
Follow these steps
What is required to include in the articles of organization?
The name and physical address of the LLC, its registered agent, the name and address of its organizer and a statement to indicate if the LLC has limited or indefinite duration.
How long does it take for the state to process my LLC application?
Normally it takes 3-5 business days.
Is it absolutely necessary for me to file an operating agreement in Arkansas?
No you do not have to file an operating agreement but it is recommended to keep and distribute amongst the members.
How much does it cost to form an LLC in Arkansas?
It costs about $45 to file articles of organization with Arkansas’ Secretary of State.
Will I need a registered agent in Arkansas?
Yes, a registered agent with a physical Arkansas address is needed to receive important legal and tax papers on your behalf.
Where can I find a good registered agent for hire?
Use the Secretary of State’s website and online directories to find qualified registered agent services in Arkansas.
Do I need an EIN to start my LLC in Arkansas?
Yes, you need to request an EIN from the IRS in order to hire employees and pay taxes in Arkansas.
What are the tax implications of owning an LLC in Arkansas?
By default, Arkansas follows the federal tax rules governing LLCs treated as sole proprietors, partnerships, or corporations, depending on how many owners are in the business (single or multiple).
What is a certificate of good standing and do I need one for my Arkansas LLC?
A certificate of good standing, or Certificate of Existence, proves that your Arkansas LLC exists and is up-to-date on all its state obligations. It is required in some states when forming subsidiaries, opening new bank accounts and more.
How often must Arkansas LLPs file reports, in addition to Articles of Organization?
Arkansas Limited liability companies (LLCs) are required to file either an Annual Report or a Biennial Report with the Arkansas Secretary of State depending on the filing frequency desired.
What is a Biennial LLC Report requirement in Arkansas?
Biennial Report for Arkansas LLCs have to be submitted every other year before the last day of the month in which they were formed
Do I need a legal office and/or virtual office space to run my LLC in Arkansas?
You must have a physical address in Arkansas for your registered agent to receive mail and legal summons. You can own the property or business, rent or lease the property or rent a virtual office.
Are LLCs in Arkansas required to obtain a business license?
No, Arkansas does not have one standard business license. However, depending on the location of your business and what you’re selling or providing a county or city business license may be required.
What liability risks does operating an Arkansas LLC shield me from personally?
You will become a private citizen as a result of your membership in the LLC; This means that anyone who has claims against your LLC must make those claims in separate action, and the liability of all managers of the LLC may notwithstanding the provisions of the articles be joint several.
Can I reserve a name before filing LLC Articles of Organization in Arkansas?
Yes, you can reserve a name through the Arkansas Secretary of State’ whose rights over that assumed title extend up to 120 days time.
Can a corporation own an LLC based in Arkansas?
Yes, both foreign companies who have LLCs or corporations present in Arkansas LLC operates foreign companies are allowed to operate with limited liability.
What is the job of an Arkansas registered agent?
Arkansas registered agents receive all legal and government documents delivered to the LLC including forms like summon documents, tax notices and compliance reminders.
Is there a minimum franchise tax I need to pay as LLC owner in Arkansas?
Not exactly, in Arkansas, franchise tax is known as the annual tax and is initially levied against the issuance of authorized or issued shares of a businesses’ stock.
How does operating agreement of Arkansas LLC work?
A written record that details the business structure of the LLC, including percentage allocation as well as profit sharing, ownership hierarchy, voting rights and more for easier decision-making.
When will the Arkansas Limited Liability Company law come into effect?
Arkansas has had the Limited Liability Company Act, enacted since 1993, being the first state in the Union after Wyoming.
What is the difference between Arkansas S Corp and LLC?
There is a very fundamental difference regarding the creation of Arkansas LLC because there are no Owner paid taxes as S Corps, while LLC’s, treated as Disregarded if they are disregarded by the IRS for bringing income tax.
Does Arkansas Recognizes a Single Member LLC?
Yes, it does- giving you almost all the benefits coupled with ample legal protections in a single-owner entity.
Can Non-US Residents form Limited Liability Companies (LLCs) in Arkansas?
Many states, including Arkansas, allow non-US residents to form LLCs and register them without residing in the United States.
How Can I Dissolve My Arkansas LLC?
You must review the specific articles regarding limited liability within your operating agreement. You are not required by law to file these acts strictly with a government agency.
What happens if I fail to pay my Arkansas franchise tax?
You need to dissolve the limited liability of business first, though penalty arises after 60days for failure to pay up on time. Penalties chart culminate at 45% maximum plus additional annual interest and obligatory hand-outs.
What is an LLC in Arkansas?
An LLC in Arkansas is a Limited Liability Company that provides limited liability protection to business owners.
How do I start an LLC in Arkansas?
You can start an LLC in Arkansas by filing Articles of Organization with the Arkansas Secretary of State.
How much does it cost to start an LLC in Arkansas?
The filing fee to start an LLC in Arkansas is $45.
Do I need to have an attorney to start an LLC in Arkansas?
No, an attorney is not required to start an LLC in Arkansas.
Can I start an LLC in Arkansas if I’m not a resident?
Yes, you can start an LLC in Arkansas even if you’re not a resident of the state.
Do I need a business license to start an LLC in Arkansas?
Yes, LLCs in Arkansas are required to obtain business licenses and pay a yearly fee.
How long does it take to start an LLC in Arkansas?
The processing time for LLC formations in Arkansas is typically around 3-5 business days.
Can I reserve a name for my LLC before filing it in Arkansas?
Yes, you can reserve a name for your LLC with the Arkansas Secretary of State for a fee of $25.
Can I cancel or withdraw my Arkansas LLC if I change my mind?
Yes, you can cancel or withdraw your Arkansas LLC by filing Articles of Termination with the Arkansas Secretary of State.
Is there a requirement for minimum capital to start an LLC in Arkansas?
No, there is no requirement for minimum capital to start an LLC in Arkansas.
Do I need to hold meetings for my Arkansas LLC?
There is no requirement to hold meetings in Arkansas, but it is recommended to have an annual meeting and maintain minutes.
Are LLCs taxed in Arkansas?
Yes, LLCs in Arkansas are subject to income tax and franchise tax.
Do I need to file annual reports for my Arkansas LLC?
Yes, Arkansas LLCs are required to file an annual franchise tax report with the Arkansas Secretary of State.
Can a corporation be a member of an Arkansas LLC?
Yes, a corporation can be a member of an Arkansas LLC.
How many members can an Arkansas LLC have?
An Arkansas LLC can have one or more members.
Will my Arkansas LLC have to pay sales tax?
Yes, if your Arkansas LLC sells taxable goods or services, you’ll have to pay sales tax.
How long is the LLC formation process in Arkansas?
The typical LLC formation process in Arkansas takes around 3-5 business days.
Where can I get the forms to start an LLC in Arkansas?
You can download Arkansas LLC filing forms from the Arkansas Secretary of State’s website.
Can I appoint a registered agent for my Arkansas LLC who lives outside the state?
Yes, you can appoint a registered agent for your Arkansas LLC who lives outside the state, but you need to have a registered agent with a physical address in Arkansas.
What is the franchise tax rate for Arkansas LLCs?
The franchise tax rate for Arkansas LLCs is $150 per year.
Can I change the name of my Arkansas LLC?
Yes, you can change the name of your Arkansas LLC by filing Articles of Amendment with the Arkansas Secretary of State.
Do I need an EIN for my Arkansas LLC?
Yes, you’ll need an EIN if you have employees or if you’re subject to certain taxes in Arkansas.
Can I change the management structure of my Arkansas LLC after it’s formed?
Yes, you can change the management structure of your Arkansas LLC by filing Articles of Amendment with the Arkansas Secretary of State.
Can I act as my own registered agent for my Arkansas LLC?
Yes, you can act as your own registered agent for your Arkansas LLC, but you’ll need a physical address in Arkansas.
Can I form a single-member LLC in Arkansas?
Yes, you can form a single-member LLC in Arkansas.
Can I convert my Arkansas LLC to another business entity?
Yes, you can convert your Arkansas LLC to another business entity by filing the appropriate paperwork with the Arkansas Secretary of State.
Are there any residency requirements for Arkansas LLC members?
No, there are no residency requirements for Arkansas LLC members.
Do I need a written operating agreement for my Arkansas LLC?
No, a written operating agreement is not required for Arkansas LLCs, but it is highly recommended.
Can I operate my Arkansas LLC from a home office?
Yes, you can operate your Arkansas LLC from a home office as long as you comply with local zoning laws.

Also Read

How Fast Can I Form an LLC in Arkansas

One of the first steps in forming an LLC in Arkansas is choosing a suitable name for the company. The chosen name must be unique and not already in use by another business entity in the state. Once a name is selected, potential business owners should conduct a search on the Arkansas Secretary of State’s website to ensure that the name is available for use. This search can typically be completed online within a few minutes, allowing for quick verification of name availability.

After selecting an appropriate name for the LLC, the next step is to file Articles of Organization with the Arkansas Secretary of State. These articles outline essential details about the company, such as its name, address, purpose, and registered agent. The articles can typically be filed online, in person, or by mail, providing flexibility for business owners in choosing the most convenient method for them. In most cases, the filing of Articles of Organization can be completed within a matter of days, allowing for a relatively quick turnaround time to get the LLC up and running.

In addition to filing the Articles of Organization, business owners forming an LLC in Arkansas must also create an operating agreement for the company. While an operating agreement is not typically required by law, it is highly recommended as it outlines important information about the company’s management structure, ownership interests, and operating procedures. This document helps establish clear guidelines for how the company will be run and can help prevent potential disputes among members in the future. Creating an operating agreement can typically be done relatively quickly, allowing business owners to establish essential ground rules for their LLC in a timely manner.

Once all necessary documents have been filed and operating agreements have been created, business owners can then obtain an Employer Identification Number (EIN) from the Internal Revenue Service. An EIN is required for taxation purposes and allows the LLC to hire employees, open bank accounts, and conduct other business activities. Applying for an EIN can typically be done online through the IRS website and can often be obtained within minutes, providing a quick and efficient way for business owners to finalize the formation of their LLC.

Overall, the process of forming an LLC in Arkansas can be completed relatively quickly, allowing entrepreneurs to establish their companies and begin operating in a timely manner. By following the necessary steps, such as selecting a unique name, filing the appropriate documents, creating an operating agreement, and obtaining an EIN, business owners can efficiently form their LLCs and start building their enterprises. With a streamlined process and efficient online resources available, starting an LLC in Arkansas can be a straightforward and expedient process for aspiring business owners.

Conclusion

In conclusion, starting an LLC in Arkansas is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Certificate of Organization, appointing a Registered Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. We recommend using ZenBusiness as they offer LLC formation at $0.

This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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