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For many new companies, forming as 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.
To avoid a misstep in the filing process, follow these steps to start an LLC in Arkansas, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Arkansas step-by-step
1. Select a name for your Arkansas LLC
Follow naming requirements
There are 3 major guidelines to follow when naming your LLC in the state of Arkansas:
- The LLC’s name must be distinguishable from those of existing business entities on file with the Arkansas Secretary of State.
- 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.”
- 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.
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.
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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
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:
- 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.
- Appoint an Arkansas registered agent.
- 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. Draft 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:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- 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.
Paying annual state taxes and filing an annual franchise tax report
Every year, Arkansas LLCs must pay at least $150 in taxes to the Arkansas Secretary of State. This includes LLCs formed within the state and foreign LLCs doing business in Arkansas. The tax payment must be coupled with an annual franchise tax report. The franchise tax report can be filed online or printed and mailed in. The annual due date is May 1.
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.
Obtaining business licenses
Certain LLCs may be required to obtain state and local business licenses, permits, or certifications in order to operate.
Visit the Arkansas Department of Workforce Services website for information on state licensing requirements, and contact a city clerk for instruction on how to fulfill local requirements.
Arkansas LLC checklist
An Arkansas LLC’s name must follow these guidelines:
- Be distinguishable from the names of existing business entities on file with the Arkansas Secretary of State.
- 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” or “Co.” for the word “Company” is acceptable.
- Professional LLC names in Arkansas must include the words, “professional limited liability company”, “professional limited company”, or the abbreviations, “PLC”, “P.L.C.”, “PLLC”, or P.L.L.C.”
- Not include the name of an individual who is not a member of the LLC with the exception of the name of a deceased member.
Required formation documents and filing fees:
- Application for Reservation of Limited Liability Company Name – Online filing fee: $22.50, postal mail filing fee: $25
- Articles of Organization – Online filing fee: $45, postal mail filing fee: $50
- An LLC is created in Arkansas by filing Articles of Organization with the Arkansas Secretary of State.
Additional legal obligations:
- Annual state taxes: LLCs must pay a minimum $150 tax each year
- Annual franchise tax report: Due every year on May 1
- Business licenses: Required for certain types of businesses
- Arkansas DFA registration: Required for certain types of businesses