Step-by-Step Guide to Forming an LLC in Arkansas

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Arkansas LLC Quick Facts

How much does it cost to form an LLC in Arkansas?

Initial State Filing Fee:
– $45 online
– $50 by mail

 

Recurring Fee: $150 Annual Franchise Tax Report

How long does it take to get an LLC in Arkansas?

It normally takes 2-3 business days to process online LLC filings to 2 weeks for mailed filings in Arkansas.

 

Expedited processing is also available for an additional fee.

Don’t want to form an LLC by yourself?

Let IncFile or IncAuthority guide you through the LLC formation process, so you know everything was done right. Only pay state fees!

Quick Reference

The Limited Liability Company (L.L.C.) is a popular type of business structure for many companies starting in Arkansas. The L.L.C. provides asset protection and has the potential to save money on taxes. With a little research, you can learn how to form an L.L.C. in Arkansas without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the L.L.C. is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an L.L.C. Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

If you provide a licensed professional service, you will be required to form a Professional Limited Liability Company (PLLC) instead of filing an LLC. Professional services include occupations such as architects, attorneys, locksmiths, and more. The process of forming a Professional LLC is very similar to the LLC, except for included your state occupational license with the application.

The state fee to form an L.L.C. is $45 when filing online and $50 when registering by mail.  Online approval takes about two weeks, while online filing typically takes 2 or 3 business days.

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

Steps to Form an Arkansas LLC

The steps for filing using the online application or by mail are mostly the same.  Below, we have step-by-step instructions for forming an Arkansas L.L.C.

To get started, either download the Arkansas L.L.C. Articles of Organization Form LL-01 or visit the Arkansas Secretary of State.

Step 1: Select the Entity

First, scroll through the list and look for the Domestic Limited Liability Company section, click on “Articles of Organization for Domestic L.L.C. – LL-01,” and then click on “Choose Filing.”

How to Register an Arkansas LLC

Step 2: Start Form

Next, find the Domestic L.L.C. section and click on the “Start Form” button under “Articles of Organization for Domestic L.L.C. – LL-01.”

Arkansas Articles of Organization LLC - LL-01

Step 3: Filing Act

The default filing act is 1003 of 1993 and applies to most L.L.C.s.  This act pertains to forming an Arkansas Limited Liability Company.

Arkansas LLC Select Filing Act 1003 of 1993

Step 4: Entity Information

Company Name – Enter the name you would like to use for the L.L.C.

There can’t be another L.L.C. with the same name as the one you want.  A link to search similar names is available to ensure the name you want to use is available.

Related: How to search available LLC names in Arkansas

Arkansas LLC Company Name Search

Additionally, when coming up with the Company Name, one of the primary naming guidelines is to use the following words or abbreviations at the end of the L.L.C.’s name:

  • Limited Liability Company
  • Limited Liability Co.
  • Ltd. Liability Company
  • Ltd. Liability Co.
  • Limited Company
  • Limited Co.
  • Ltd. Company
  • Ltd. Co.
  • L.L.C.
  • L.C.
  • LLC
  • LC

See the full list of Arkansas L.L.C. name requirements before finalizing your name.

Before selecting a business name, you may also want to see if a domain name is also available.

Managers Statement 

L.L.C.s can either be Manager-Managed or Member-Managed.

Member-Managed L.L.C.s have an active involvement in the day-to-day operations of the business.
Manager-Managed L.L.C.s are hired by the members to run the L.L.C., similar to a C.E.O. of a corporation.

If a manager will manage the L.L.C., a statement needs to be included in this section.

Most L.L.C.s are member-managed and would leave this section blank.

Arkansas LLC Manager Managed vs Member

 

Step 5: Principal Information

Enter the principal place of business of the L.L.C.  This has to be a physical address that can be a home address, office address, or the registered agent’s address.  No Post Office boxes are allowed.  This address will receive mailings from the Secretary of State.

Arkansas LLC Principal Place of Business

Step 6: Registered Agent Information

In Arkansas, a registered agent must be selected to act as the primary point of contact to be the agent for service of process on behalf of the LLC. Service of process refers to when legal correspondence such as tax documents, summons, subpoenas, and other important legal documents are sent, so the receiving party has sufficient time to respond. A registered agent can either be a full-time resident of Arkansas or a business entity with a physical presence in the state (no P.O. Boxes are allowed) or a registered agent service authorized to transact business in Arkansas that is available during normal business hours.

You can act as your own registered agent in Arkansas and you are not required to pay for a registered agent.

Any individual meeting the above requirements can be the agent, however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home or still employed.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce the number of unwanted phone calls and mailings.

Be sure to either enter a Business Name if using a commercial registered agent company or first and last name if it is an individual, along with the registered office address, phone, and email.

Related: Do I Need a Registered Agent in Arkansas?

File a Registered Agent for Arkansas LLC

Step 7: Select Officers

Add all of the officers in this section.  If there are multiple officers, enter their information and click on Save Officer.

At least one member will enter their information, which may be the same person in the Principal Information and Registered Agent section.

One area that is a bit confusing is the title. Choices include:

  • Incorporator/Organizer –  An L.L.C. Organizer is involved with the LLC formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant.
  • Manager – If the L.L.C. is Manager-Managed and the Manager Statement was filled out, this person would be listed here.
  • Member – The members will be listed here.  All of the initial members will also be saved as Incorporator/Organizers.
  • Managing Member – Will be used if the manager is also a member.

Click “Save Officer” for each person listed.

Arkansas LLC - List Officers

Step 8: Submitter Contact Information

This section is used should the Secretary of State have any questions during the application process and where the final documents should be sent.

Step 9: Annual Report Contact Information

Enter the name and address where the Annual Report should be sent.

Step 10: Sign the Agreement

Effective Date – By default, the L.L.C. is effective on the date submitted.  If you prefer to have the L.L.C. officially start at a later date (up to 90 days), enter that date in the field. Otherwise, leave the field blank.

Signature – Click on the box saying this is not a false document, enter your signature in the Signature box, and hit Submit.

File your Arkansas LLC Free

Step 11: Review, Pay, and File

Do a final review of the information provided to ensure the registration documents are correct and make the payment.

If sending by mail send to:
Arkansas Secretary of State
500 Woodlane Street, Suite 256
Little Rock, AR 72201

If you have questions, contact the Business and Commercial Services Division of the Arkansas Secretary of State.
Phone: 501-682-3409
Email Address: corprequest@sos.arkansas.gova

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Tasks After Forming your LLC

Once your new LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare an Arkansas LLC Operating Agreement

An operating agreement is an internal document that governs the framework and operating procedures of an LLC.  This document covers items like ownership percentage, ownership rights, member responsibilities, how profits and losses are distributed, and more.

The state of Arkansas doesn’t require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, leading to costly disputes in the future.

Learn more about the operating agreement and download an Arkansas operating agreement template.

Obtain a FEIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file tax returns, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an Arkansas EIN

Elect the LLC’s Form of Federal Income Taxation

One of the major benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how a legal entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, LLCs are pass-through entities. Instead of the LLC paying taxes on profits, the profits or losses flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can elect to be taxed as a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can elect to be taxed as a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay income tax and self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, be sure to talk with an accountant to assess which one will be best for you.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the formation paperwork showing the official creation of the LLC.
  • Driver’s licenses of the members.
  • Depending on the LLC age, an Arkansas Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits to register for before starting. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Sales Tax Permit – To sell products and certain services, registration with the Arkansas Department of Finance and Administration will be necessary to collect sales taxes.

Related: What Business Licenses are Needed in Arkansas?

File Annual Reports

LLCs are required to file an Annual LLC Franchise Tax Report with the Arkansas Secretary of State.  The Annual Franchise Tax Report updates ownership information and other details.

Related: How to File an Arkansas LLC Annual Report

 

Common Questions When Starting An LLC

You can act as your own registered agent, provide you are a resident of the state and are generally available during normal business hours. 

It’s sometimes thought that the LLC and business license are the same, which they aren’t.  Business license requirements vary by location and the type of business being operated. 

An out-of-state LLC wanting to do business in another state will have to register as a foreign LLC with the new state’s Secretary of State.

Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.

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