Have a great business idea and need help getting started? You may want to form an Arkansas LLC to protect yourself legally and for tax purposes. It only takes a little research to learn how to get an LLC in Arkansas. We’ll give you a step by step guide to starting your business, followed by answers to some of the most frequently asked Arkansas LLC questions.
Starting an LLC in Arkansas will include the following steps:
- #1: Choose a Name for Your Arkansas LLC
- #2: Hire a Registered Agent in Arkansas
- #3: Request a Federal Employer Identification Number (EIN)
- #4: File Your Certificate of Organization
- #5: Create an Operating Agreement
- #6: Fulfill Your Ongoing Obligations
How to Get an LLC in Arkansas: 6 Steps
Creating your Arkansas LLC is as easy as filing a few documents with the Arkansas Secretary of State. Forms are available online for almost any action you need to take, including making amendments to previous filings.
1. Choose a Name for Your Arkansas LLC
The first step to starting your business is to name it. Before you start designing your logo, make sure your name isn’t already taken, since it needs to be unique to be attached to your LLC. You can perform an Arkansas LLC search for free to make sure your name is available. Even if the name seems to be available, the Arkansas Secretary of State can deny your request to reserve your name if it doesn’t follow certain guidelines:
- Contains the words “Limited Liability Company,” “Limited Company,” or “LLC” or “LC,” with or without punctuation
- Contains the words “Professional Limited Liability Company,” “Professional Limited Company,” “PLLC” or “PLC” if the company provides professional services
- Doesn’t contain words which could confuse your business with a government agency
- Isn’t too similar to an existing Arkansas business name
Differentiating your name is an important part of figuring out how to get an LLC. In Arkansas, if your preferred name is similar to an existing business name, the following practices can help distinguish it and increase your chances of acceptance:
- Specific geographic location if businesses are in different towns outside of a 100-mile radius
- Specific services offered (for example, Lola’s Bakery vs. Lola’s Tax Services)
- Adding keywords
The following types of businesses require special approval from the relevant state licensing authorities, which should be included with the application to gain approval from the Secretary of State:
- The name includes “bank,” “trust” or a similar word
- The name includes “engineer,” “engineering” or a similar word
- An LLC engaging in the practice of medicine or dentistry
- An LLC operating as an insurance company
- The name includes “razorback(s)” or “Arkansas razorback(s)”
Once you’ve decided on a name, you can reserve it through the Secretary of State. If accepted, the name will be held for 120 days for you to finish forming your LLC.
2. Hire a Registered Agent in Arkansas
A “registered agent” is a designated entity located in Arkansas that receives official correspondence on behalf of the business. You can change your registered agent for free on the Secretary of State’s website after your LLC is formed.
Wondering how to get an LLC in Arkansas for the lowest cost? Registered agent companies provide this service for as low as $49 per year. You have the option to serve as your own registered agent, but most business owners choose not to because of the legal requirement that a registered agent be available during all business hours at the designated address. This can make it difficult to work remotely, take days off or find a replacement if you’re sick.
3. Request a Federal Employer Identification Number (EIN)
Before officially forming your LLC, you’ll need a federal tax number from the IRS, commonly called an employer identification number (EIN) or federal tax identification number. Request one for free from the IRS website. Even if you don’t plan to hire employees, you’ll need this number to register for Arkansas’s franchise tax system.
Inside Scoop: Many states don’t require LLCs to get an EIN if they’re single-member LLCs, don’t have any employees and meet certain other requirements. This is not true in Arkansas, where you need an EIN to form any type of LLC.
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4. File Your Certificate of Organization
To fill out your certificate of organization, Arkansas will require the following information:
- Name of your LLC
- Address of your principal place of business, which will be part of the public business record
- Name and address of your registered agent
- Name and title of at least one member
- Federal EIN
You can file the certificate of organization two ways. The first option is to file online on the Secretary of State’s website using a fillable form, which requires choosing an effective date for your LLC and paying a $45 fee.
The second option is to print a PDF form and submit a $50 check or money order made out to the Arkansas Secretary of State to the following address: Secretary of State, 1401 West Capitol, Suite 250, Little Rock AR 72201.
5. Create an Operating Agreement
Arkansas does not require an operating agreement to be on file, but it’s wise to have one from the very beginning to determine how you want your business to be run. An operating agreement is essentially a contract among members of the LLC, so it may be a good idea to consult an attorney when drafting one, even if you start with a template (these are widely available online).
LLC formation businesses can help draft operating agreements for a fee, in addition to helping you figure out how to get an LLC in Arkansas. Operating agreements usually contain information about the following:
- LLC Name
- Membership
- Management structure (the default structure is that all members make management decisions collectively, known as “member-managed;” you can also designate specific managers — this is known as “manager-managed”)
- Duties of members and managers
- Voting rights
- Distributions
- Meetings
- Buyout and buy-sell policies
- Succession
- Dissolution
- How to modify the operating agreement
6. Fulfill Your Ongoing Obligations
Figuring out how to get an LLC in Arkansas off the ground is only the beginning. There will inevitably be ongoing requirements to keep your business legitimate, especially tax obligations.
Pay Federal, State and Local Taxes
You’ll pay federal income tax on your earnings from your Arkansas LLC, either as a disregarded entity or as a corporation if you elect to be taxed that way. You’ll also need to file an Arkansas Corporate Franchise Tax in the amount of $150, due by May 1 of each year. Local taxes may apply depending on where you operate.
Keep Necessary Licenses Up to Date
You may need professional licenses, such as medical or accounting certifications, which have to be renewed periodically. You may also need certain licenses to operate, say, a retail business or restaurant.
Pros and Cons of Forming an LLC in Arkansas
Pros
- The filing fee to form an LLC in Arkansas is only $50, which is low compared to most states
- Arkansas does not tax personal income
- Arkansas LLC laws are straightforward with fewer compliances and allow customized management
Cons
- If structured as a corporation, income may be taxed at entity and individual level
- LLCs must file an annual report and pay a $150 fee to maintain status
The Bottom Line: Forming an LLC in Arkansas
In Tennessee, creating an LLC is a very simple procedure that only requires a few steps to finish. To make paperwork easier, the state offers a wealth of materials, including template forms and step-by-step instructions. Examining top LLC formation services may also help to expedite the procedure.
How to Get an LLC in Arkansas: FAQ
Is an LLC Right for Me?
If you’re learning how to start an LLC, you’ll want to know what an LLC is. LLC stands for “limited liability company,” a type of business structure that offers the legal protection against liability like a corporation, with a lower administrative burden. Every state has its own requirements for creating LLCs. They can have one or more “members,” or owners, which can be individuals or other business entities.
The default tax status of an LLC is a “pass-through” entity, meaning the income the members receive from the LLC “passes through” and is taxed at each member’s personal income level. This is a major difference between an LLC and a corporation. An LLC can elect to be taxed as a corporation, which is subject to taxation both at the business income level and at the members’ personal income level (this is known as double taxation). An LLC does this by filing a specific form with the IRS. An accountant can give you a complete picture of the pros and cons of different tax statuses.
If you have an LLC in another state and simply want to do business in Arkansas, you’ll need to register your foreign LLC in Arkansas.
How Long Does It Take to Get an LLC in Arkansas?
Filing the paperwork for an LLC can take less than a day, but may take a bit of research beforehand to learn how to get an LLC in Arkansas. You may need to spend time developing your business idea, coming up with a business name and working out an operating plan. You can put as much or as little time into these steps as you want, but the more you plan ahead, the better chance your business has of succeeding.
How Much Does it Cost to Start an Arkansas LLC?
The cost aspect of how to get an LLC in Arkansas can vary slightly, depending on whether you file online, by mail or in person. The complete filing fee schedule for setting up a domestic LLC can be found here. Filing online can save you a few dollars for most steps:
- Certificate of organization (domestic LLC). $45 online; $50 by mail or in-person
- Application for reservation of LLC name. $22.50 online; $25 by mail or in-person
- Certificate of registration (foreign LLC). $270 online; $300 by mail or in-person
So, to set up a standard domestic LLC, expect to pay $67.50 if you file online, and $75 if you file by mail or in person. This is before any legal or accounting fees if you seek consulting services for your business. Additionally, many formation companies will help you with your paperwork for a flat fee, usually for less than $100.
Can I Start an LLC Online?
Wondering how to get an LLC in Arkansas in the most convenient way? You can apply for an LLC online. Arkansas makes it relatively easy and cost-effective to file online rather than in-person or by mail. Use Arkansas’s business online filing system to complete the process.
Can I Form an LLC by Myself?
Yes, the legal requirement for an LLC is that it has at least one member. That member could be you! You may hear the terms single-member LLC (for LLCs with only one member) or multi-member LLC (for more than one member), but the two are created the exact same way.
A single-member LLC is also known as a “disregarded entity” by the IRS. Disregarded entity is a million-dollar way of describing how the LLC is taxed. It is “disregarded” as separate from the member — the LLC’s income is considered the same as the member’s personal income, and is taxed as such.
