Do you have a great idea for a business? Need help getting started? To protect yourself legally as well as for tax purposes, you might want to create an LLC. You only need to do a little research in order to find out how to form an LLC in Arkansas. This guide will walk you through the steps of starting your business. We also provide answers to common questions about Arkansas LLCs.
Best LLC Services to Start an LLC in Arkansas
6 Steps to Get an LLC In Arkansas
It is easy to create an Arkansas LLC by simply filing a few documents with the Arkansas Secretary of State. Online forms are available for nearly any action, even amending previous filings.
1. Select a name for your Arkansas LLC
Name your business before you start to build it. Before you begin designing your logo, ensure that your name isn’t already taken. This will allow your LLC to attach your unique name to it. To verify your name is not already taken, you can run an Arkansas LLC search. If the requested name isn’t in the Arkansas Secretary Of State’s approved list, the Arkansas Secretary can refuse to reserve it.
- Contains the words “Limited Liability Company,” or “Limited Company”, or “LLC” and “LC”, with or without punctuation
- Contains the words “Professional Limited Liability Company,” or “Professional Limited Company,” if the company offers professional services.
- It doesn’t include words that could cause confusion for your business when you deal with a government agency
- It’s not too similar to an Arkansas business name
It is important to distinguish your name when you are trying to establish an LLC. Arkansas has a policy that allows you to use a name similar to an existing company name. The following tips can help you distinguish your name and increase your chances of being accepted:
- If businesses are located in towns other than 100 miles from each other, you can specify the geographic location.
- Services offered by specific companies (e.g. Lola’s Bakery vs. Lola’s Tax Services).
- Adding keywords
These types of businesses need special approval from the state licensing authorities. This information should be included in the application to the Secretary of State.
- This name can be used to refer to “bank”, “trust” or another similar word.
- This name can be used to refer to “engineer”, “engineering”, or another similar word.
- an LLC that practices medicine and dentistry
- an LLC that acts as an insurance company
- This name also includes “razorback(s),” or “Arkansas Razorback(s),”
After you have chosen a name, the Secretary of State will allow you to reserve it. The name will be held until you have completed forming your LLC.
Tip: Your LLC can be registered under a formal name or you can do business under a different name if desired. After forming your LLC, you will need to submit an “Application For a Fictitious name for LLC” online to the Secretary of State. This fictitious name can also be called a “DBA”, which stands for “doing business as”.
2. Arkansas Registered Agents
A registered agent is an entity that is located in Arkansas and receives official correspondence for the business. After your LLC has been formed, you can easily change your registered agent on the website of the Secretary of State.
Are you looking for the best way to obtain an LLC in Arkansas at the lowest price? This service is provided by registered agent companies for as low $49 per annum. Although you have the option of being your own registered agent but many business owners prefer to not do so due to the legal requirement that the registered agent must be available at all hours of business at the address. This can make it difficult for you to work remotely, take days off, or find a replacement in case of illness.
Tip: Legal filings can be delivered to this address, so you might not want to serve your own agent. If you are serving as your own agent and have clients in your office you might be served with a lawsuit or other documents that you don’t want anyone to see.
3. Request a Federal Employer ID Number (EIN).
You will need a federal tax ID number from the IRS before you can officially form your LLC. This is also known as an EIN (employer identification number) or federal tax identification numbers. You can request one free of charge from the IRS website. This number is required to register for Arkansas’s franchise system, even if you do not plan to hire employees.
Tip: LLCs are not required to request EINs in many states if they are single-member LLCs that don’t have employees or meet other requirements. Arkansas does not require LLCs to request EINs. You will need one in order to form any type or LLC.
4. Register your Certificate of Organization
Arkansas will need the following information to fill out its certificate of organization:
- Name of your LLC
- Your principal business address will be included in the public business record.
- Name and address for your registered agent
- Name and title for at least one member
- Federal EIN
Two ways to file the certificate of organization are available. You can file the certificate of organization online at the Secretary of State’s website. This requires filling out a form and choosing an effective date.
You can also print the PDF form and send a $50 check/money order to the Arkansas Secretary of State at the address below: Secretary of the State
1401 West Capitol Suite 250
Little Rock AR 72201
Tip: It is difficult to do it right the first time. After your LLC is established, you can amend your certificate of organization online for $22.50 or by mail for $25.
5. Make an Operating Agreement
Arkansas doesn’t require that an operating agreement be filed. However, it is a good idea to have one at the beginning of your business in order to decide how you want it to run. Operating agreements are basically a contract between members of an LLC. It is recommended that you consult an attorney when creating one.
LLC formation companies can assist with the creation of operating agreements. They also help you to determine how to register an LLC in Arkansas. Usually, operating agreements include information about the following:
- Name of the LLC
- Management structure (the default structure in which all members make management decisions together, also known as “member-managed”; you can designate specific managers — known as “manager-managed”)
- Members and managers have responsibilities
- Voting rights
- Buyout and buy-sell policies
- Modifications to the Operating Agreement
Tip: Effective September 2021, the Uniform Limited Liability Company Act, (ULCA) was passed to allow LLCs to file in Arkansas. It declared that operating agreements are not mandatory. The ULLCA states that operating agreements are not required to be written down. They can however be made by the members of the LLC. To avoid any confusion about how your LLC should function, you can create an operating agreement in writing and have all members sign it.
6. Fulfill your ongoing obligations
The first step in establishing an LLC in Arkansas is to figure out how it works. You will need to continue operating your business, including tax obligations.
Pay Federal, Local, and State Taxes
Federal income tax will be charged on the earnings of your Arkansas LLC. This tax can be paid as either a disregarded entity or as a corporation if you choose to pay that way. An Arkansas Corporate Franchise Tax of $150 will be required. This tax must be filed by May 1, each year. Local taxes could apply depending on where your business is located.
Keep Your Licenses Current
Professional licenses such as accounting or medical certifications may be required. These must be renewed regularly. Some licenses are required to open a restaurant or retail shop.
Tip: The Arkansas Small Business and Technology Development Center provides consulting services for residents looking to start small businesses in the state. Before you create your LLC, you should have a formal business plan. This will help you navigate the licensure process as well as let you know what to do after it is operational.
Business808, a renowned consulting organization that aids startups in scaling and growing, is led by Andy Brooks as Editor-in-Chief.
Andy has over 12 years of consulting experience and is a pro at creating and managing profitable businesses. He has experience working with several LLCs and Registered Agent services and has a degree in business management. He has assisted clients in achieving their objectives.
In addition to writing for Business808, Andy is a well-known author and speaker, and an active contributor to several online business publications, imparting his knowledge on how to grow an LLC.