How to Start an LLC in Arkansas
How to start an LLC in Arkansas in 6 easy steps
Step 1. Naming Your Arkansas LLC
One of the most important steps in starting up your Arkansas LLC is naming your business. Your LLC name will need to be unique from every other business in the state, in addition to following several other naming rules.
Legally Required Designation
To be compliant with Arkansas LLC regulations, the name of your business must contain the phrase “limited liability company” or one of the following abbreviations:
- LLC
- L.C.
- LC
- C.
- Limited Company
- Co.
Keep in mind that you can’t use the name of anyone who is not a member of your LLC in the official name, save for a deceased LLC member. In Arkansas, there are separate naming rules for a professional LLC, which you can see below. PLLCs must contain one of the following words:
- Professional Limited Liability Company
- Professional Limited Company
- PLLC
- L.L.C.
- PLC
- L.C.
If you are attempting to establish a professional LLC, make sure that you have met all state and federal [ANCHOR TO #Aquire Necessary Permits and Licenses]licensing requirements[END ANCHOR LINK]. Aside from naming regulations, professional LLCs are set up in the same manner as typical Arkansas LLCs.
Unique Name
As you start thinking about what to name your LLC, you can run a search on the Arkansas Secretary of State’s website to check for an available name. This will help you ensure that your name is distinct and not at risk of infringing on any other business in the state.
You may want to reserve an available name ahead of time by filling out the Application for Reservation of Entity Name. This form will hold your chosen name for up to 120 days before filing to establish your LLC. The application can be filed either online or through the mail. There is a $25 filing fee if sent through the mail, or a $22.50 fee if filed online.
You may also want to perform a domain name search while you are searching for an available LLC name. Even if you don’t want to set up a business website immediately, it is a good idea to purchase a matching domain name ahead of time, reserving it for when you do want the website.
Restricted Words
When choosing an LLC name, keep in mind that you are not able to include any words that run the risk of confusing your business with a government entity. This can include words like “IRS,” “Treasury,” “FBI,” or “State Department.”
You should also be aware that using words such as “bank,” “trust,” or “attorney” can categorize you as a professional LLC, and may require the presence of a properly licensed individual in your LLC and additional LLC paperwork.
Using a Trade Name
You can use a trade name or DBA (doing business as) name for your LLC in Arkansas. This means that you will continue using the legally registered LLC name on all official documents, but can use a different registered name when interacting with the public.
In order to register your DBA name in Arkansas, you will need to file the Application for Fictious Name. You can file this form online or by sending it to the address listed on the form. There is a $25 fee for filing by mail, or a $22.50 fee if you choose to file it online.
Step 2. Appoint a Registered Agent
A registered agent must be appointed for every LLC established in Arkansas. Your registered agent will be responsible for receiving all legal documents, government communications, and tax documents, essentially acting as a contact point between your LLC and federal agencies or the state of Arkansas. They will also be the responsible party that is contacted in the event of a lawsuit against your LLC.
You can appoint any Arkansas resident or a business that is authorized to conduct operations in the state as your registered agent. As long as your appointee has a valid state address, they are eligible to be your registered agent.
Step 3. File Your Articles of Organization
In order to officially establish your LLC in Arkansas, you will need to file your Articles of Organization with the Secretary of State’s office. These Articles will contain vital information about your business, some of which you can check out below, and your LLC will not be legal in the state until the document is processed.
On your Articles of Organization, you will need to include:
- Your LLC’s name
- Your LLC’s principal office address
- Your LLC’s registered agent name and address
- If your LLC is member-managed or manager-managed
- The signature of the LLC’s organizer
You can file your Articles of Organization online or through the mail. There is a $45 fee for online filing or a $50 fee for filing through the mail. You can find more information on filing fees for different LLC documents here.
You will be asked to provide information for annual franchise tax filing in the Articles of Organization. We will provide you more information about that [ANCHOR TO #File Annual Franchise Reports]here[END ANCHOR LINK]. The form will also ask for a Federal Tax ID, which you can read about in [ANCHOR LINK #Get an EIN]this section[END ANCHOR LINK].
Online
To file your Articles of Organization by mail, you will need to go to the Arkansas Secretary of State Corporations Online Filing System. From there, you will select the form you wish to file (Articles of Organization, form LL-01) and input all the necessary information. Once you submit the online filing, you will pay the $45 filing fee and the form will begin processing. In general, it will take up to a week for your LLC to be established in this way.
By Mail
If you would like to file your Articles of Organization by mail, you will need to print out the Articles of Organization form and fill it in clearly. You can then take the completed form and place it into a secure envelope, along with a check for $50 made out to the Arkansas Secretary of State, and send it to the address below. It can take between 2 and 3 weeks for your LLC to be established this way.
Arkansas Secretary of State
1401 W Capital Ave Ste 250
Little Rock, AR 72201
Step 4. Create an Operating Agreement
An operating agreement is not required by the state of Arkansas, but it is a good idea to create one for your LLC anyway. An operating agreement sets clear guidelines for how exactly your LLC is managed, the rights that members or managers have, and what to do in the case that your LLC dissolves or experiences a lawsuit.
Additionally, most business bank accounts, loan applications, and other business services will require you to have an operating agreement on hand to demonstrate your LLC as a separately operating business entity before you can secure funding or business services
Step 5. Get an EIN/Tax ID Number
Once your LLC is legally established in Arkansas, you will need to apply for a Tax ID number, also known as an EIN (Employer Identification Number), from the IRS. Any LLC that has more than one member. any single-member LLC that wants to hire employees, or any entity that chooses to be taxed as a corporation is required to apply for an EIN.
Your EIN will be used to identify your business to the IRS on all tax documents and necessary government filings. The number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts, or apply for business funding, you will need an EIN.
It is free to apply for your EIN with the IRS, and you can file the application online or by mailing it in.
Online
The quickest and easiest way to apply for your EIN is online. You will receive your number as soon as your application is completed. Visit the IRS website to apply for your EIN for free.
By Mail
If you are a foreign filer or do not have a social security number, you will need to file for your EIN through the mail. You will need to fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can call if you have any questions for the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 6. Keeping Your LLC Running
After your LLC is established, there are several items of business that you will need to keep up with in order to ensure that your company stays running smoothly.
File Annual Franchise Reports
All LLCs that are operating in Arkansas must pay $150 in franchise taxes to the Arkansas Secretary of State annually. This tax payment is due alongside your LLC’s annual report and will need to be filed before May 1st of each year.
You can file this report online or print out the applicable form and send it to the below address. Remember that you will need your LLC’s information in addition to your EIN when filing this form. There are penalties for late forms, and failure to turn in the report altogether could result in your LLC being involuntarily dissolved.
Business and Commercial Services
P.O. Box 8014
Little Rock, AR 72203
Separate Your Business Finances
A business credit or debit account can help keep your LLC’s finances separate from any personal ones, establishing the LLC as an independently operating business. It is not required by Arkansas to open a business bank account, but it may be a good idea to establish one anyway.
You will most likely need to show your Articles of Organization, Operating Agreement, EIN, or possible other LLC documents to open a bank account for your LLC. Compare all of your options before making a choice on which bank account to open, as different banks will have varying minimum required balances or credit spending limits.
Keep up With Federal and State Taxes
While your LLC is operating in Arkansas, it is important to keep up to date with both federal and state taxes. This will help you meet all your tax obligations and avoid incurring any major penalties or fines.
Federal Tax Requirements
There are several different tax structures you can choose from to use in your LLC that may meet different company needs, and each tax structure comes with its own unique type of federal taxation. This article can help you gain an in-depth understanding of the differences between each type and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means that you will be expected to file Schedule C along with your individual income tax return to declare any income that you receive through your LLC. When using this tax structure, you should keep in mind that you will most likely need to pay self-employment tax (which has a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS penalties.
If you want, you can choose to have your LLC taxed as an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to make this declaration. After these forms have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Arkansas Business Taxes
In addition to annual franchise taxes, your LLC may also be liable for corporation taxes. In the case that your LLC is taxed as an S Corporation or a C Corporation, you may need to pay extra taxes to the Arkansas Department of Finance and Administration. You can find more information about this tax here.
You should also keep in mind that if your LLC is taxed as a sole-proprietorship or a partnership, it will likely be treated as a pass-through entity. This means that any income you earn will be taxed on a state level when you file your individual state income tax return each year.
If you have any questions about the taxes that you may owe, you should consult with a financial advisor or a professional accountant to make sure you meet all of your tax obligations without issue.
Sales and Use Taxes
If your LLC will be selling goods or services, you may be liable to pay Arkansas sales and use taxes. These taxes are typically registered for and filed through the Arkansas Department of Finance and Administration, and you can read more about calculating and paying these taxes on the Department’s website here.
State Employer Taxes
If your LLC has employees, you will most likely need to pay state withholding and unemployment insurance taxes. Withholding taxes will be registered for and paid through the Arkansas Department of Finance and Administration (more information about that here), and unemployment insurance taxes will need to be registered for and paid through the Arkansas Division of Workforce Services.
Acquire Necessary Permits and Licenses
While there isn’t a general state business license required by Arkansas, your LLC may need to secure permits or licenses on a city or county level. Check with the clerk’s office of the locality that your LLC is located in for more information on this.
If you are creating a professional LLC, you may be required to meet certain state requirements for obtaining licenses. You can read more about professional business licensing in this guide here, or you can visit the Arkansas state government portal for free business assistance.
Additionally, you may be required to obtain certain permits and licenses for your LLC on a federal level. Whether this is needed depends mostly on the type of business you are running and the services you are offering. For help determining if you need to meet additional federal licensure requirements, you can use the directory on the U.S. Small Business Administration’s website.
Arkansas LLC Resources
The below guide of LLC resources can help you along every step in the Arkansas LLC establishment process.
- Available LLC name search
- Reserve an LLC name
- Available domain name search
- Register a DBA name
- Articles of Organization
- Arkansas Corporations Online Filing System
- IRS EIN online application
- Annual Report form
- Annual Report online file
- Arkansas Department of Finance and Administration
- Arkansas Division of Workforce Services
- Arkansas state government website
- S. Small Business Administration
Arkansas LLC FAQs
The answers to these frequently asked questions can help you clear up any lingering worries about starting your LLC in Arkansas.
In Arkansas, it will cost you $45 to file your Articles of Organization online or $50 to file through the mail. You may also need to pay up to $25 to reserve an LLC name ahead of time or $25 to register a DBA name in the state.
The cheapest way to start your LLC in Arkansas is to file your Articles of Organization online without reserving an LLC name ahead of time or registering a DBA name with the state. Doing it this way will only cost you $45 to get your LLC established.
If you file your Articles of Organization online, it can take up to a week for your business to be established. If you chose to file through the mail, it can take between 2 and 3 weeks for your form to be processed and LLC established in the state.
How much your LLC pays in Arkansas depends on the individual tax structure you have set up in your business. In addition to federal taxes, you may also need to pay state income taxes, corporation taxes, sales and use taxes, or state employer taxes.
Make sure to consult with a financial professional if you are confused at any point about which taxes you owe.
In Arkansas, you will need to file a state report annually. LLCs will need to pay a $150 fee when filing the report, and it is due by May 1st of each year. Failure to file the report may result in penalties and the involuntary dissolution of your LLC.
If you are done conducting business under your LLC, you will need to file Articles of Dissolution with the Secretary of State’s office. You can file this document online or through the mail; there is a $45 online filing fee or a $50 paper filing fee associated with this form.
You should also consult with your operating agreement to make sure you follow the agreed-upon terms for winding down your LLC’s business.