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There is no question that Arkansas works hard to be business-friendly. The state does that in a number of ways, from lessening burdensome regulations and overhauling the tax structure, to building infrastructure and supporting workforce education.

In fact, Arkansas receives top honors based on factors, such as licensing requirements, tax regulations, and labor and hiring regulations. The state supports startups and grows existing small businesses, with more jobs, new technology and avenues to market their products across the state, the country and the globe.

So, let’s dive into how to start an LLC in Arkansas step by step, so you can turn your business idea into a business plan of action!

Choose a Business Entity for Your Arkansas LLC 

To understand how to start your Arkansas small business, you need to understand entity formation.  Limited Liability Companies (LLCs) and Corporations are the most popular business types.

Business formation is important because it sets your company apart as a professional company and not just a hobby.

Corporation

A corporation is a legal entity created separately from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.

Limited Liability Company

LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLC formation protects the owner’s personal assets and also shields them from personal liability similar to a corporation. They also possess the “pass-through” tax benefits of a partnership.

There are two types of LLCs. LLC run by just own person (single-member LLC) and LLCs run by multiple people (multi-member LLCs)

Starting a LLC in Arkansas can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, but you’ll also get expert guidance beyond business formation, so you never have to wonder or worry about what to do next!

What About DBAs?

DBAs (which stands for “doing business as”) grant business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name. 

For sole proprietors and owners of LLCs, DBAs offer an affordable way to gain legal recognition for the secondary name of your choice.

• Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
• LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.

A DBA provides privileges like the ability to open a bank account, create enforceable contracts and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in Arkansas, get the proper legal recognition early on to start off on the right legal footing. 

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Create a Business Name

Under Arkansas law, an LLC must have the words “Limited Liability Company,” “Limited Company,” or the abbreviation “L.L.C.,” “L.C.,” “LLC,” or “LC.” The word “Limited” may be abbreviated as “Ltd.,” and “Company” may be abbreviated as “Co.”

Companies which perform professional services must use the words “Professional Limited Liability Company,” “Professional Limited Company,” or the abbreviations “P.L.L.C.,” “P.L.C.,” “PLLC,” or “PLC.” The LLC name cannot contain the name of a person who is not a member except that of a deceased member. The word “Limited” may be abbreviated as “Ltd.” and the word “Company” may be abbreviated as “Co.”

Your LLC’s name must be distinguishable from the names of other business entities already on file with the Arkansas Secretary of State. Names may be checked for availability by searching their gov site, the Arkansas Secretary of State business name database.

An available name may be reserved for 120 days by filing an Application for Reservation of Limited Liability Company Name with the Arkansas Secretary of State. The form may be completed and filed online or by postal mail. The filing fee is $25 if done by mail or $22.50 if done online.

Arkansas LLC Registration  

Let’s take a look at how to register a business in Arkansas, including payables such as the cost, government fees, and so on.

File an Articles of Organization

An Arkansas LLC is created by filing Articles of Organization (called articles of incorporation for corporations) with the Arkansas Secretary of State. The Arkansas Secretary of State charges a $45 fee to file the Articles of Organization online and $50 if filed by mail. In addition,

The articles must include:

• the LLC’s name
• the LLC’s address
• the name and address of LLC’s registered agent
• a statement as to whether the LLC will be run by a manager, and
• signature of organizer.

You may file the form online, or print out the form and file by postal mail. The filing fee is $45 if done online or $50 if done with paper copies

Arkansas LLC Operating Agreement

An LLC operating agreement is not required in Arkansas, but it is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.

Issues that should be defined by your LLC Operating Agreement include:

• Member powers
• Rules for meetings
• Members’ voting rights
• How your LLC will be managed
• Guidelines for losses and profits
• Buyout provisions

Once the operating agreement has been adopted, it will provide protection for the members of your LLC. When the members of your LLC have agreed on the terms of your operating agreement and have signed the document, you should keep the agreement in a secure location.

Inc Authority can remind you to do or do for you if you choose to have us handle the paperwork.

Arkansas State Filing Fee:	$45
Filing Time:	Up to 1 week

Mail to:

Arkansas Secretary of State
1401 W. Capital Ave.
Suite 250
Little Rock, AR 72201

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Get Your Employer Identification Number or EIN

The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.

Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost that Arkansas laws require.

To apply for your EIN, you’ll need to complete form SS-4, which can be found on the IRS website.

Assign a Registered Agent for your LLC in Arkansas

There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.

But did you know that all businesses are required by law to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business days and hours? Without an office, that would be your street address or P.O. box.

As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in.

A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your LLC in Arkansas.

Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:

• Limit third party access to your personal information
• Ensure that you never miss important documents
• Protect the privacy of owners
• Eliminate junk mail
• Ensure you’re never served with legal papers in front of your clients
• And more!

Setting up a Registered Agent Service

Every Arkansas LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be an Arkansas resident or a business entity authorized to do business in Arkansas. The registered agent must have a physical street address in the state.

Open a Business Bank Account for Your LLC in Arkansas

To keep your personal and business expenses separate and to stay in good standing with the Internal Revenue Service (IRS), you need to open a business bank account for your LLC or corporation.

Setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete, and file your income tax returns with the Department of Revenue, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. Bank accounts also provide better protection in the event of legal action.

Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.

Types of Business Bank Accounts

Not all business bank accounts are created equal. That’s why it’s important to distinguish between the good, the bad, and the best business bank accounts.

Checking Accounts

A business checking is the most common type of business bank account and the first one you’ll want to open for your business. This because business check accounts allow you to: 

• Accept deposits (over-the-counter cash, checks, credit card, and electronic deposits). 
• Pay for business-related expenditures (payroll, taxes, business insurance, vendors, lenders, and everything imaginable that you’ll need to operate your business). 
• Keep detailed records of all expenses and income.
• Protect your money. This account is Federal Deposit Insurance Corporation (FDIC) insured, meaning you’re covered up to $250,000 by the federal government should anything happen to the bank or your money.
• Support dual signatures. If you have a partnership or employees, you may wish to make it required that two signatures be present whenever a withdrawal or deposit is made.

Savings Accounts

This one should come as no surprise. A business savings account (like a personal savings accounts) lets you safely save money in a bank.  You don’t need this right away though, only when you have an abundance of capital sitting in your business checking account, will you need to open a savings account. It allows you to: 

• Make saving money a habit. The most successful companies (think blue chips like Wal-Mart, Amazon, General Mills, Hershey’s, and General Electric) all have solid reserves of capital.
• Protect your business during a cash-crunch. Incidentally, 80% of businesses fail because of cash flow problems.
• Save money so that you don’t have to take out expensive business loans.
• Maintain liquidity. With a business savings account, you can liquidate assets to buy equipment, purchase real estate, and make other big purchases for your business. 
• Build business credit. Yes, having a business savings account can actually help you establish and build business credit.

Business Certificate of Deposits

A business certificate of deposit (CD) is a term account that offers maximum security and a guaranteed rate of return. You agree to lend your business’s money to the bank for a set period of time at an agreed-upon interest rate. The interest rates are usually higher than you’d receive from a business savings account or interest-bearing business checking account. 

Here are the main features of a business certificate of deposit:

• It pays out 1% or more in interest. Some CDs pay over 2% in interest
• You cannot liquidate the account until the term expires. This means you can’t spend the money. 
• The longer the term, the higher the interest rate.
• Different banks offer different term limits. Some CD terms are for a week, months, or even years.

Money Market Accounts

This is a lesser-known type of business a bank account and isn’t for every business owner. You’ll want this type of account if you have a lot of money saved, want higher interest rates than a business savings account or interest-bearing business checking account, but still want some access to your money.

Here are the main features of a business money market account:

• Six withdrawals per month. 
• Deposit money anytime.
• Deposit as much money as you like.
• Higher interest rates (currently between .1% and 1.6% APY)
• Require a minimum balance.
• Penalties if you withdraw more than six times in a month. Ask your banker what the penalty is if you withdraw more than six times.

How to Open a Business Bank Account

Opening a business bank account is as simple as gathering some information together and completing an application. Here are the steps to open a business checking account:

1.    Do your due diligence. Research different banks and discover what each one offers. Then decide which one will work best for your business type. An easy way to do this research is to check out some of our business bank reviews.

2.    Get a tax ID number. You can get one free EIN from the IRS. If you think you already have one, here’s how to look up an EIN.

3.    Gather your business formation documents (for LLCs and Corporations).

4.    Gather your business license or business name filing paperwork.

5.    Call the bank and find out what other items you’ll need to open a business bank account. Every bank has different requirements, so make sure you check with them first before attempting to open a business bank account. Sometimes this information will be listed on the bank’s website.

6.    Go in person or online to complete all necessary paperwork and submit your business documents.

At Inc Authority, we make getting a business bank account easy. How so? Well, when you form your business with us, you gain access to a free Bank of America business checking account. So, don’t wait! Form your LLC in Arkansas today!

Tax and Regulatory Requirements

Additional tax and regulatory requirements may apply to your Arkansas LLC. This may include:

EIN: If your LLC has more than one member, it must obtain its own IRS Employee Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you still need to obtain an EIN or elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

Pay Annual State Tax Obligations

All LLCs and foreign LLCs must pay a minimum $150 tax to the Arkansas Secretary of State each year. Annual franchise tax reports must also be filed with the Arkansas Secretary of State. You can file the annual franchise tax report online or download a report form from the Arkansas Secretary of State website. The franchise tax report, including the $150 tax payment, is due each year by May 1. It is important to note that there are penalties for late reports.

In some cases, if you will be selling goods and collecting sales tax, or if you have employees, you’ll need to register with the Arkansas Department of Finance and Administration (DFA). For most purposes, you can either register online (using the Arkansas Taxpayer Access Point (ATAP)) or on paper (using Form AR-1R, Combined Business Tax Registration Form). 

Getting Started with Your Arkansas LLC

Forming a professional LLC or corporation in Arkansas is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?

We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the licenses and permits needed to run your business. We can also advise you on the things you need to pay, such as LLC cost, Arkansas state fees, and other payables.

Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. Please contact us or visit our website today to get started!

Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.

Related Articles:

• How to Open a Business Bank Account: For LLC Owners
• How to Start an LLC
• 3 Simple Ways to Register A Business Name
• How to Start a Bank