How to Start an LLC in Arkansas (Step-by-Step Guide)

For many new companies, forming an LLC is the best option as it is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Additionally, LLCs often enjoy a lower tax rate than corporations. However, forming an LLC can be a little complicated, and each U.S. state has a unique checklist for starting an LLC with minor procedural variations.

Starting an LLC in Arkansas is relatively simple: the formation process is straightforward, filing fees are low, and the state’s annual tax obligations are reasonable. Thankfully, those forming an LLC in the Natural State have it pretty easy.

1. Select a name for your Arkansas LLC

Follow naming requirements

There are three major guidelines to follow when naming your LLC in the state of Arkansas:

1. The LLC’s name must be distinguishable from those of existing business entities on file with the Arkansas Secretary of State.
2. The LLC’s name is required to contain the words, “Limited Liability Company”, “Limited Company” or the abbreviations, “LLC”, “L.C.”, “LC”, or “L.L.C.” Substituting “Ltd.” for the word “Limited” and/or “Co.” for the word “Company” is acceptable.
   • The names of professional LLCs in Arkansas must include the phrase, “professional limited liability company”, “professional limited company”, or the abbreviations, “PLC”, “P.L.C.”, “PLLC”, or P.L.L.C.”
3. The LLC’s name must not include the name of an individual who is not a member of the LLC unless it is the name of a deceased member.

Need help coming up with a business name? Check out our free business name generator.

Reserve your LLC name with the Secretary of State

After selecting a name for your LLC, you may reserve it with the Arkansas Secretary of State. First, check that your chosen name is available using the Arkansas Secretary of State business name database.

If the LLC name is available, you can reserve it for up to 120 days with the Arkansas Secretary of State through the filing of an Application for Reservation of Limited Liability Company Name.

Filing can be done online (filing fee: $22.50) or by postal mail (filing fee: $25).

2. Designate a registered agent

As in every U.S. state, forming an LLC in Arkansas requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.

The registered agent must either be a state resident with a street address in Arkansas OR if the individual or business is based out-of-state, they must be registered with the Arkansas Secretary of State.

3. File Articles of Organization

After reserving a name and choosing a registered agent, you can legally form your LLC by filing Articles of Organization with the Arkansas Secretary of State. Filing can be completed online (filing fee: $45) or by printing out the form and mailing it to the Secretary of State (filing fee: $50). Using a credit card is the preferred form of payment.

Your LLC Articles of Organization should provide the following details:

• LLC name
• The address of the LLC’s principal office
• Whether the LLC is run by its members or a manager
• Registered agent name and address
• Signature of organizer

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Arkansas, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN) 

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and to perform a number of other important functions. You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your Arkansas LLC’s additional legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

Obtain business licenses

In Arkansas, LLCs do not require a single universal business license at the state level, but the specific permits and licenses needed depend on your business’s industry and location.

• Sales tax permit: For statewide requirements, you must obtain an Arkansas Sales Tax Permit if you plan to sell taxable goods or services, which can be registered online with the Arkansas Department of Finance & Administration.
• Explore state occupational licenses and local licenses: Apart from these statewide requirements, there are other potential permits and licenses to consider. If your business operates in a regulated profession such as cosmetology or accounting, you must obtain the appropriate professional license from the respective licensing board. Visit the Arkansas Department of Workforce Services website for information on state licensing requirements.

Additionally, local permits and licenses may be required depending on your city or county and your specific industry or location. Contact your local government office for information on any local requirements.

Understand state taxes

The tax situation for an Arkansas LLC is influenced by two primary factors: its federal tax classification and the specific business activities and location. LLCs are typically considered pass-through entities, which means that the LLC itself doesn’t pay federal income tax. Instead, the profits and losses flow through to the individual owners (members), who report them on their personal tax returns.

• Franchise tax and sales tax: Additionally, all LLCs, regardless of tax classification, are required to pay an annual franchise tax of $150 to the Arkansas Secretary of State by May 1st. Furthermore, if an LLC sells taxable goods or services within Arkansas, it must register for and collect sales tax, with the state sales tax rate at 6.5%, and additional local sales taxes applicable based on the business’s location.
• Local taxes: It’s also essential to note that cities and counties in Arkansas may impose additional local taxes on businesses, so research into local requirements is vital based on the LLC’s location.
• Complete Arkansas DFA registration: Depending on the nature of the business, your LLC may be required to register with the Arkansas Department of Finance and Administration. Examples include businesses with employees and businesses that collect sales tax.

Registration can be completed online using the Arkansas Taxpayer Access Point.

Understand BOI reporting

Federal reporting requirements for beneficial ownership information (BOI) are crucial for enhancing transparency and combating financial crimes.

• Companies formed prior to 2024 have the duration of 2024 to complete their filing.
• Companies formed in 2024 must report within 90 days of receiving a Certificate of Organization.
• Starting in 2025, newly formed companies will have 30 days.

LLCs must report details, including the names, addresses, dates of birth, and government IDs of beneficial owners and individuals with control through FinCEN’s BOI E-Filing System.

Learn more about BOI reporting.

Post LLC tasks

Set up business bank accounts

While there is no requirement for your Arkansas LLC to have a business bank account, it is highly recommended for tax and personal liability reasons. While there is no specific state law mandating it, LLCs and corporations should always maintain a separate business bank account to ensure legal and financial separation between personal and business finances.

• Benefits of a business bank account: Having a business bank account offers several advantages, including improved financial tracking, simplified tax management, a more professional image, potential access to business loans, and in some cases, limited liability protection in legal situations, making it a practical choice for many businesses.
• Banks to consider: Most major banking institutions offer bank accounts for LLCs, but be sure to look at the fees and make sure you choose one that fits your financial needs. Banks like Found, Relay, and Mercury have offerings designed specifically for small companies and new businesses like LLCs.

Obtain a Certificate of Good Standing

A Certificate of Good Standing is a vital document for LLCs operating in Arkansas, as it verifies that the business is compliant with state regulations and has fulfilled its statutory requirements. While it’s not required by Arkansas law to have one one file, this certificate is often required for various business transactions, such as obtaining loans, renewing licenses, or entering into contracts with other entities.

• How to get it: To obtain a Certificate of Good Standing, you can make a request through the Arkansas Secretary of State’s office online, by mail, fax, phone, or in person. The processing typically takes the same day, with the addition of mailing time if necessary, and has a fee of $28.

Build a website

Creating a website when you start your LLC comes with many benefits that can significantly help your small business. Firstly, it makes it easier for potential customers to find you and learn about your offerings, boosting your online presence and credibility.

This is especially important if you rely on online leads or sales. A professional website also acts as a marketing and sales tool, allowing you to showcase your products or services and capture leads through contact forms or online orders. Additionally, it provides a way to communicate with your audience by sharing news, updates, and blog posts, building trust with potential customers.

To launch a website, follow these steps:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Pick a web builder like Domain.com or GoDaddy to create a site with no coding experience necessary.
4. Tailor your site to your customers, adding appropriate pages, content, and images.
5. If you’re selling goods, add an e-commerce section to your site.
6. Review, test, and publish your site.

Costs to set up an LLC in Arkansas

Average set-up cost for an LLC in Arkansas: $200-$400

One benefit of LLCs is their relatively low startup costs, and Arkansas is no exception. Take a look at these common startup expenses:

• Incorporation fees: It costs $45 to file for your Articles of Organization online and $50 when done on paper. You can also pay more for an expedited process, and some counties require you to publish a notice of formation. Publication costs vary and are usually around $30 per week for three weeks or more.
• Annual Franchise Tax Report fee: You’ll pay an annual Franchise Tax of $150, which is combined with Arkansas’ Annual Report. The report and fee are managed through the Secretary of State via online filing.
• Registered agent service fees: All LLCs must list a registered agent. While many owners choose to fill this role themselves, some choose to hire a professional service to collect confidential information on behalf of the company. If you opt for a registered agent service, you’ll pay an annual fee for the service. The fee usually hovers between $50 to $200.

Foreign LLCs

LLCs formed outside of Arkansas that intend to do business in the state are required to register with the Arkansas Secretary of State.

Foreign LLCs can register to operate in the state by completing the following steps:

1. Comply with Arkansas LLC naming guidelines and confirm that your LLC name is available for use in the state using the Arkansas Secretary of State business name database.
2. Appoint an Arkansas registered agent.
3. File an Application for Certificate of Registration of Foreign Limited Liability Company either online or through the mail. The filing fee for registering online is $270, and the filing fee for registering through the mail is $300.
4. Foreign LLC’s must obtain a certificate of existence from their home state.