How to Start an LLC in Arkansas
Arkansas LLCs (limited liability companies) provide their owners with limited liability protection, a range of management options, and certain tax advantages. To officially form your LLC in Arkansas, you’ll need to file the Certificate of Organization with the Arkansas Secretary of State and pay a $50 filing fee ($45 online). First, you must choose your company name, designate a registered agent, and acquire an Employer Identification Number (EIN) from the IRS. We’ll walk you through the process of starting an LLC in Arkansas and getting it off the ground.
Ready to Start an LLC in Arkansas?Get Started
Name Your LLC
Designate a Registered Agent
Get an EIN
Write an LLC Operating Agreement
Open a Bank Account
Fund the LLC
File reports + taxes
1. Name Your LLC
Your business name has to follow Arkansas’s permitted name rules for LLCs, which are covered in AR Code § 4-38-112. In short, your LLC name cannot:
- Be already taken by another Arkansas business.
- Contain words or abbreviations that imply that it’s a different business type, such as “corporation,” “limited partnership,” “inc.” “LP,” etc.
- Use the name of a person who is not a member of the LLC, unless they are a former member or member of a predecessor organization.
Also, your LLC name must include the words “limited liability company,” “limited company,” or an abbreviation thereof, such as LLC.
Already have a business name? Check to see if it’s available.
Can I reserve a business name in Arkansas?
Yes. If you want to make sure no one else claims your LLC name while you prepare to start your business, you can file an Application for Reservation of Entity Name with the Arkansas Secretary of State and pay the $25 fee ($22.50 online).
What’s the difference between my LLC’s name and an assumed business name?
Whatever business name you write on your Arkansas Certificate of Organization will be your LLC’s legal name. But down the road, you may decide you want to use a different name for your business, without going to the trouble of forming a whole new LLC. In this case, you’d need to register an assumed business name (aka fictitious business name or DBA). You’ll need to submit an Application For Fictitious Name with the Secretary of State and pay the $25 filing fee ($22.50 online).
Considering using an assumed business name? Learn How to Get a DBA.
2. Designate a Registered Agent
Before you can officially form your LLC, you must appoint a registered agent. An Arkansas registered agent is a person or company that accepts service of process (lawsuits) and important notices from the Secretary of State on your business’s behalf. All Arkansas LLCs are required to appoint a registered agent. You’ll have to include your registered agent’s name and address on the Certificate of Organization.
Learn why the pros use a registered agent service.
What does a registered agent do?
The duties of Arkansas registered agents are listed in AR Code § 4-20-114. Basically, a registered agent must:
- Maintain a physical address (not a P.O. box or virtual office) in the state of Arkansas.
- Be available during regular business hours to accept service of process in person.
- Forward important legal mail to your business without delay.
Can you be your own registered agent in Arkansas?
Yes. If you don’t mind having your name and address listed on the public record, and you can keep regular business hours to accept service of process, you can be your own registered agent.
However, many business owners choose to hire a registered agent service to avoid sharing their personal information and ensure that they don’t miss an important legal notice when they’re on vacation.
Can I change my registered agent after I start an LLC?
Yes. It’s free to change your registered agent in Arkansas. You just need to file a Notice of Change of Registered Agent with the Secretary of State.
3. Get an EIN
An Employer Identification Number (EIN), also known as a Federal Employer Identification Number (FEIN), is a tax identification number similar to a social security number, but for businesses rather than individuals. This is the number the IRS will use to identify your business on tax forms. It is free to get an EIN directly from the IRS. You can either apply online (the fastest way) or by mail (slower, but necessary if you don’t have a social security number).
Do I need an EIN for my Arkansas LLC?
Yes. In Arkansas, you are required to include an EIN on the Certificate of Organization. Plus, LLCs almost always need an EIN to open a business bank account.
4. Write an LLC Operating Agreement
Your operating agreement is the guiding document for your LLC. It specifies in detail how your LLC is structured and how it functions. This is where you record how much each member invested, how you’ll vote on amendments, and even what you’ll do if—knock on wood—the business goes under.
Check out our attorney-drafted Arkansas LLC Operating Agreement.
Does Arkansas require an LLC to have an operating agreement?
Arkansas LLCs aren’t required to adopt a written operating agreement. According to AR Code § 4-38-102 (14), an operating agreement can be written, oral, or implied.
However, it is in your company’s best interest to adopt a written operating agreement. Why? For one thing, a written operating agreement is required to open a business bank account. Plus, if you ever have to face a lawsuit, a written operating agreement could help you prove your case in court. Oral or implied operating agreements are difficult to prove and don’t carry as much weight.
What should be included in an operating agreement?
Your operating agreement should plan for what your LLC will do in important situations, including allocating profits and losses, transferring membership interest, and settling disputes. Here are some of the topics most operating agreements cover:
- initial investments
- profits, losses, and distributions
- voting rights, decision-making powers, and management
- membership interest
- dissolving the business
Arkansas puts some restrictions on what an operating agreement may include, which you can find in AR Code § 4-38-105. But for the most part, your operating agreement can include any rule for your LLC that is compliant with Arkansas laws.
Does a single-member LLC need an operating agreement?
Yes. While your single-member LLC won’t have to settle disputes between members, you will still need an operating agreement to open a business bank account. And if you’re ever sued, your operating agreement can help you demonstrate that your LLC follows clear rules and procedures, which could be crucial to maintaining your limited liability protection.
What To Do After Forming Your Arkansas LLC
5. Open a Bank Account
Your next step is to open a business bank account. Why? Your LLC has limited liability protection because it is legally considered a distinct entity, separate from its members. If you keep your LLC’s money in a personal bank account, a court could decide that your business is not a separate entity, and you could be held personally liable for business debts.
When you go to to open your business bank account, be sure you have the following items with you:
- Arkansas LLC Certificate of Organization (a copy is fine)
- the LLC’s operating agreement
- the LLC’s EIN
- an LLC Resolution to Open a Bank Account (if your LLC has more than one member).
If your LLC has more than one member, use our free LLC Resolution to Open a Bank Account.
6. Fund the LLC
Your business isn’t going to get very far without funding. Your members should each make an initial investment in the LLC to pay for their membership interest. Most of the time, members write checks to the LLC bank account. However, you could allow your members to invest in the form of property or services. Keep in mind that investments of property or services often trigger tax events.
What is LLC membership interest?
Membership interest is the percentage of the LLC that each member owns. Usually, membership interest is proportional to the amount each member invested. So if five members invest $1,000 each, and a sixth member invests $5,000, the first five members would each own 10% of the LLC, and the sixth member would own 50%. Membership interest is often directly correlated to voting power. This means that in this example, the sixth member’s vote would have the same weight as the other five members’ votes combined.
7. File State Reports & Taxes
In Arkansas, LLCs are required to file a Franchise Tax Report every year. While franchise tax is—as the name suggests—a tax, it is a flat fee of $150 for all Arkansas LLCs. The report itself serves to give the state updated contact and ownership information for your business.
Scared you’ll forget? Let us file your Arkansas Franchise Tax Report for you.
When is the Arkansas Annual Franchise Tax Report due?
The Arkansas Franchise Tax Report is due by May 1st. Be aware that if your tax report is late, you’ll be charged a $25 late fee, plus 10% interest for every year you are delinquent. Interest will continue to accrue until your late fee is twice as much as your original fee.
How are Arkansas LLCs taxed?
By default, Arkansas LLCs themselves do not pay taxes other than the Annual Franchise Tax. Instead, LLCs are treated as pass-through entities, and the revenue “passes through” the business to the owners, who report the revenue as personal income on their tax returns. LLC revenue is taxed at the federal self-employment tax rate (15.3%). LLCs can also elect for S-Corp or C-Corp tax status.
Learn more about S-Corp Vs LLC tax designation.