How to Start An LLC in Arkansas
To start an LLC in Arkansas, you must file Articles of Organization with the Arkansas Secretary of State, pay a $45-50 filing fee, and get an EIN tax ID from the IRS. The complete steps to forming an Arkansas LLC are as follows:
- File Arkansas LLC Articles of Organization
- Pay the Arkansas Secretary of State Office $50 ($45 online)
- Wait about a week (2-3 days if filing online) and receive your approved Articles and a Certificate of Approval
- Get a Federal EIN tax ID for your LLC
- Create an Arkansas LLC Operating Agreement
- Take these documents to the bank and get an Arkansas LLC bank account
How to File Arkansas LLC Articles of Organization
To form an Arkansas LLC, you file the LLC Articles of Organization by following these steps:
- Choose a name for your new LLC
- Decide what address you’d like to list publicly
- Decide if you want to hire a registered agent service to minimize public disclosures
- Choose whether members or managers will manage your LLC
- Choose a contact to receive the annual franchise tax reporting form and provide their address and phone number
- File online and pay $45 with a credit card (fastest) or mail to the Arkansas Secretary of State at 1401 W Capitol, STE 250 Little Rock AR 72201 with a check or money order for $50
HOW LONG DOES IT TAKE TO START AN ARKANSAS LLC?
Not overly long. Processing averages 2-3 days if you file online and 1-2 weeks by mail.
WHAT IS THE COST OF AN ARKANSAS LLC?
The Arkansas Secretary of State charges $45 for online filings and $50 for paper filings. If your hire Northwest to form your LLC, the total cost is $270 and includes a full year of registered agent service.
How much does an LLC in Arkansas cost each year?
There’s an annual fee of $150 due May 1st. The fee is technically a franchise tax. The form filed is called the Annual LLC Franchise Tax Report, but it’s basically a standard annual report, updating the Arkansas Secretary of State on your LLC’s contact and ownership information.
What are the Arkansas LLC taxes?
The Arkansas personal net income tax rates for single filers are:
0.9%: $0 to $4,298
2.5%: $4,299 to $8,499
3.5%: $8,500 to $12,698
4.5%: $12,699 to $21,198
6%: $21,199 to $35,099
Arkansas also has a state sales tax of 6.5%. On top of that, cities and counties can add their own sales tax. For example, Little Rock’s sales tax is 1.5% and Pulaski County’s sales tax is 1%, making the total sales tax in Little Rock (state, county and city) 9%.
IS AN ARKANSAS LLC REGISTERED AGENT REQUIRED?
Yes, every LLC in Arkansas needs a registered agent. That doesn’t necessarily mean you have to hire someone. You could do the job yourself—although you’ll likely take some hits to your privacy and your freedom. Registered agents are required to publicly list a physical address that will become a part of the permanent record of your Arkansas LLC. Unfortunately, publicly-listed addresses are common targets for data-sellers and spammers. Registered agents also have to be regularly available at the address listed in case a process server drops by. Arkansas won’t sympathize if you miss a process server because you’re visiting a supplier or taking a sick day. Hire Northwest and you can unchain yourself from your desk and list our address on your LLC’s public documents instead of yours.
DO I NEED A TAX ID NUMBER (EIN) FOR AN ARKANSAS LLC?
Even if you don’t need one right away, you should get an EIN. They’re required if your LLC has employees or if you need special tax filings like Alcohol/Tobacco/Firearms returns.
EINs are also indispensable once you start navigating finances. EINs allow you to easily open a business bank account and establish credit with vendors. If you’re concerned about privacy (at Northwest, you may notice we care a lot about privacy), you can often provide your LLC’s EIN instead of handing over your personal social security number on many applications and forms. You can apply for an EIN directly from the IRS or add on EIN service for an additional fee when you hire us.
DOES AN ARKANSAS LLC NEED A BUSINESS LICENSE?
There’s a good chance you’ll need a business license. In Arkansas, business licenses are issued at the local level (not the state), so whether or not you need a license depends on where your business is registered. For example, cities like Little Rock, Fayetteville and Hot Springs all require business licenses while Arkadelphia doesn’t.
Licensing fees in Arkansas are all over the place, so you’ll probably want to check out the website of the city where you plan to register your business. Just in Little Rock, a candy store might pay as little as $75 a year for a business license while a television station could easily pay over $1000.
ARKANSAS LLC VERSUS ARKANSAS CORPORATION:
An Arkansas LLC will typically end up costing about the same or less than an Arkansas corporation. While the initial filing fees are the same, the annual franchise tax is calculated differently for LLCs and corporations. LLCs pay a flat fee ($150) while corporations pay 0.3% of “outstanding capital stock” (the stock that’s been issued and not held as treasury stock). Have $500,000 in outstanding capital stock? Be prepared to shell out $1500 a year.
If you have less than $50,000 in stock, you’d think that you’d pay less than an LLC—except that there’s a MINIMUM tax of $150 for corporations (and a $300 minimum for corporations without stock). Arkansas is determined to make sure your corporation doesn’t escape its franchise tax.
So, if your Arkansas corporation doesn’t have a lot of stock, the cost is pretty much the same as an LLC. In that case, which business type should you choose? LLCs have fewer formalities and are generally easier to manage. Think a corporation might be better for you? Here’s some more information on Arkansas incorporation.
DOES AN ARKANSAS LLC NEED AN OPERATING AGREEMENT?
Legally, there’s no requirement for an operating agreement, but, yes, you should absolutely have one.
Can you imagine accepting a job at a company that hadn’t figured out yet what your role was, how much they’d pay you and when? Or if they wouldn’t put anything in writing? That would be nuts. Yet some LLCs operate this way. Members are left in the dark while the LLC bumbles along with their investments, figuring things out as they go or making promises with handshakes.
An operating agreement puts the information members and managers need in writing—what rights and responsibilities everyone has, how much people have invested, how profits and losses will be distributed, and even what happens if the business falls apart. You can’t expect people to be comfortable in your business or working with your business if you don’t have these basic things in writing.
At Northwest, we know that an operating agreement is one of the most critical internal documents for your LLC. That’s why when you hire us to form your California LLC, you get an operating agreement specific to your management style. We’ve spent years developing and improving these and other free forms. At Northwest, we’re passionate about a lot of things. Privacy, for one. But also developing forms that are actually useful, not like a lot of the other free junk floating out on the web. Our free LLC forms have been used by over a million LLCs:
ARKANSAS LLC ARTICLES OF ORGANIZATION REQUIREMENTS:
- Company Name: You have to include “Limited Liability Company,” “Limited Company” or an abbreviation like “LLC.” Professional LLCs have to add the “professional” designation as well or use an abbreviation like “PLLC.” Odds are, your business is not a professional LLC (that’s not to say you aren’t perfectly professional, just that most LLCs don’t offer the services of licensed professionals like lawyers or dentists).
- Principal Place of Business: Essentially, they’re asking you what you’d like your mailing address to be for non-legal documents. This address will be public record. Hire us, and you can list our address and avoid putting your own.
- Registered Agent: You can appoint yourself, someone else, some other business, or hire a service specializing in registered agent service—such as Northwest.
- Registered Address: This is the address for receiving your legal documents. Again, the address will become part of the public record (and you can’t use a PO Box, either). You can probably guess by now which address you can use instead when you hire us. (It’s ours. Our address.)
- LLC Management: If your LLC is managed by its members, you don’t have to do anything special. However, if your LLC is managed by managers, you have to state this information in your Articles.
- Officers: On the online form, there is a space to list “officers.” LLCs don’t actually have officers—what they want is the name and address of your organizer and the name and address of at least one member or manager. The organizer is the person or business signing and submitting the Articles (like Northwest when you hire us). For the member or manager’s address, you don’t have to use a personal address—a business address (like ours) is sufficient.
- Effective Date: The online form has the option to put a future effective date within 90 days. Why wouldn’t you want to start your business right away? Say you’re submitting Articles in December but don’t want the hassle of paying taxes for the current year for just a couple of weeks of business—you can delay your start date until the new year begins.
- Signature: The organizer of the LLC has to sign the Articles. Most people take this to mean that one of the members or managers has to sign, but really it’s just the person who submits the document. Hire us, and we’ll sign your Articles (and don’t worry—signators don’t receive any privileges or rights in your LLC; they’re just paper pushers).
- Franchise Tax Contact Name, Address and Phone Number: Arkansas really, really wants to make sure they can send you their franchise tax form. They request an address and phone number (actually, they request a lot more than that, but you’re only required to put your entity name, address and phone number). You can use a PO Box for more privacy, but the phone number requirement is kind of annoying. If you put your number, it will become a permanent public record—meaning it will probably get sold over and over again. At Northwest, we allow our clients to put our phone number and information, so your phone line isn’t clogged with telemarketers.