Are you thinking of starting your own business in Arkansas? If so, you’ll need to familiarize yourself with the state’s specific LLC requirements. In this guide, we’ll outline everything you need to know about starting an LLC in Arkansas, from filing fees to company naming guidelines. So whether you’re just getting started or are already in the process of forming your LLC, read on for helpful insights that will make the process as smooth as possible.
The Limited Liability Company (LLC) is a popular type of business structure for many companies starting in Arkansas. The LLC provides asset protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC 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 and protects the LLC owner’s personal assets.
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 including your state occupational license with the application.
The state fee to form an L.L.C. is between $45 depending if filing online or by mail. Online approval takes about two weeks, while online filing typically takes 2 or 3 business days.
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Steps to Form an Arkansas LLC
Are you thinking of starting a business in Arkansas? If so, and you are planning to start an LLC, this guide will outline the steps to get started, from choosing a name for your company to filing your paperwork.
Step 1: Choose an LLC Name
The first step in forming an Arkansas Limited Liability Company is to make sure the name you want is available. There can’t be another LLC in Arkansas with the same name as the one you want.
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.
Before selecting a business name, you may also want to see if a domain name is also available.
Step 2: Select an Arkansas Registered Agent
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.
The requirements to be an Arkansas registered agent include; being a full-time resident of Arkansas and being available during normal business hours at a physical street address (no P.O. Boxes are allowed). You, as the business owner, can act as your own 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 becomes 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 are still employed. Hiring a commercial registered agent service like Northwest Registered Agent will help keep the owner’s names from being publicly listed.
Step 3: File the Arkansas Certificate of Organization
Created under the Arkansas Filing Act 1003 of 1993, the paperwork to create an LLC in Arkansas is called a Certificate of Organization.
To get started, either download the Arkansas LLC Certificate of Organization Form LL-01 or file it online with the Arkansas Secretary of State.
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.
Email Address: email@example.com
Turnaround time for approving the Certificate of Organization normally takes 2-3 business days to process online LLC filings to 2 weeks for mailed filings. Expedited processing is also available for an additional fee.
When filing the Certificate of Organization, there are a few sections that may be unfamiliar. Let’s go over a few of those sections.
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 LLC 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.
One area that is a bit confusing is the title. Choices include:
- Incorporator/Organizer – An LLC Organizer is involved with the LLC formation of the Certificate 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.
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.
What To Do After Setting Up Your Arkansas 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.
Related: Arkansas operating agreement template.
Obtain a FEIN
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as 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, build business credit, register for business licenses and permits, file federal and state taxes, 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 also register by phone, fax, or mailing IRS Form SS-4.
If an Employer Identification Number isn’t required, the LLC can either use the owner’s social security number or register for an EIN.
Related: How to Apply for an Arkansas EIN
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.
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.
File the Annual Franchise Tax Report
LLCs are required to file the annual Arkansas Secretary of State Franchise Tax Report. The Annual Franchise Tax Report updates ownership information and other details.
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Arkansas LLC FAQs
How much does it cost to form an LLC in Arkansas?
The cost to form an LLC in Arkansas is a Certificate of Organization filing fee of between $45, which is paid to the Arkansas Secretary of State.
Is there a yearly fee for an LLC in Arkansas?
To renew an Arkansas LLC each year, a $150 Annual Franchise Tax report will need to be filed with the Arkansas Security of State.
How long does it take to get an Arkansas LLC approved?
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.
Can you be your own registered agent for your LLC in Arkansas?
Anyone can act as a registered agent, provided they are at least 18 years old, reside in the state, and are generally available during normal business hours.
Do you need a business license for an LLC in Arkansas?
It’s sometimes thought that the LLC and business license are the same, but they aren’t. An LLC is referred to as a business entity, which is how the business is organized to conduct business. A business license is approval from a government entity to operate legally.
Business licenses are not based on the business entity, however they are based on what the business does and where it is located in Arkansas.
What is an Arkansas Foreign Limited Liability Company?
An Arkansas foreign limited liability company is an LLC that was formed in another state, but wants to physically operate in Arkansas. Physically operating means having a presence such as having an office or hiring an employee.
Related: What is a foreign LLC?
What is an Arkansas Professional Limited Liability Company?
Businesses that require state licensing 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.
Related: What is a professional LLC?