If you live in Arkansas, you already know that this state boasts high living standards and is one of the most favorable US states to live and work in. It’s a multi-cultural area open to many different types of activities. The most popular and well-developed industries still welcoming new entrepreneurs are agriculture, transport and logistics, forestry and timber, aerospace and defense, not to mention multiple opportunities in social and public spheres. At a state level, the business environment is greatly supported by government incentives and special grant programs to guarantee solid step-by-step growth for smaller business entities. So, living in Arkansas or planning to move here, it’s a great idea to make it a starting platform for your business endeavors. And a limited liability company is by far the best structure for your prospective enterprise.
These are the major points that will be reviewed below to provide detailed yet clear instructions for all beginner businessmen in Arkansas.
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Officially, your new Arkansas business starts with a name. To be able to register your LLC, first, you should give it some kind of moniker.
It doesn’t seem like anything special, however, there are certain limitations and rules set forth by the state regulations, namely, Section 4-38-112 of the Arkansas Code. Hence, when naming your Arkansas LLC, stick to the following rules:
Section 4-38-112 of the Arkansas Code also contains rules that you should pay special attention to when choosing a name for your company.These rules contain such clauses:
When you have some LLC name versions in mind, it’s recommended that you check them for any forbidden words and availability before you use one of those options for filing an LLC in Arkansas.
Each state has a business name registry covering all already formed companies and those awaiting formation. Using a special search tool on the Arkansas Secretary of State’s website, you can search through that base to figure out if the name you want is available. If the desired name version is not occupied, you can put it on hold in Arkansas for a period of up to 120 days. You can do it via the same state website by filing an online application and paying a $22.5 fee. Or you can send a reservation application by regular mail to the following address:
Secretary of State’s Business and Commercial Services Division1401 W. Capitol, Suite 250
Little Rock, Arkansas 72201
Along with the hard copy of the application, you’ll have to attach a check confirming the payment of a $25 reservation fee.
Similar to other states, Arkansas allows LLCs to use DBA names. A DBA (doing business as) is an assumed, fictitious, or trade name a company can use for business operations. Unlike a registered LLC name, a DBA requires no “LLC” tag which makes it a nice option for marketing and advertising purposes. Besides, a DBA is a breeze to change while changing a registered company name entangles quite a number of formalities.
To file a fictitious LLC name in Arkansas, it’s enough to submit an application form to the Secretary of State’s office. You can do it either online or via mail. It will cost $22.5 and $25 accordingly. Surely enough, digital forms are considered faster.
If you wonder what benefits you’ll get with a DBA name, there is quite a number of significant pluses. First of all, you can register more than one DBA for your LLC that will give you an opportunity to launch several brands, products, or service lines under the roof of a single LLC. There will be no need to pass through formation formalities. Besides, all your business and financial records will be on the same plate.
If you start small and plan to grow big, DBA will help you keep up with the growth pace. Thus, you can open a small bakery under the name “Steve’s Bakery” and, over time, start producing other sweets and chocolate. By changing the name to “Steve’s Confectionary”, you’ll easily match the business upscale.
A registered agent in Arkansas is a must-have position for any LLC in the US. Its role is to handle your company’s legal mail on your behalf and timely inform you about any urgent correspondence or letters that require an immediate response. As such, this function is a part and parcel of your LLC’s compliance maintenance since it will help you accurately observe all state requirements and catch up with any regulatory deadlines and reporting dates.
Registered agent’s activity in Arkansas is regulated by Section 4-38-115 of the Arkansas Code. The state won’t register your LLC unless you designate a registered agent before filing. Meanwhile, law requirements for this role are not that strict. Any adult person residing in the state or a legal entity registered and operating there could serve as your Arkansas registered agent. The rule of thumbs is that a person or entity should have a registered address in the state and be permanently present under that address during business hours on weekdays to be able to receive official papers and services of process addressed to your LLC.
A service of process is a term for a legal document normally sent to the parties of a lawsuit by court or complainants. Should your business be sued, It’s vital that you get these documents in time. And the registered agent in Arkansas will take care of that.
Many beginner entrepreneurs choose between serving their own registered agents or hiring third parties for that purpose. While being an agent for your own LLC, you save some money and rest assured no one but you has access to your correspondence, it’s still not the best option. Though it seems an easy, convenient, and straightforward choice, there is quite a couple of drawbacks to it:
To help you find a decent and efficient registered agent service with a good reputation, we’ve made a detailed review of the Best Registered Agent Services.
Hiring a professional service to be a registered agent for your Arkansas LLC is the best method to resolve all the above-mentioned issues. It will cost you about $100 a year. Yet, the peace of mind you’ll get is worth much more. All your letters will be received in time, duly organized, and reported to you. You won’t miss anything that could cause business problems or jeopardize your LLC’s compliance status. In case you have plans for future business expansion to other US states, we recommend choosing a registered agent service provider that operates nationwide. This way, once you set up an LLC in any other state, you’ll already have an agent there.
The third step to take when you’ve already chosen a name for your future LLC in Arkansas and made up your mind about a registered agent for your prospective entity is to file your formation documents with the state. In Arkansas, an LLC formation doc is called a Certificate of Organization. Being quite generic by nature, this document is a kind of a “birth certificate” for your future business. Without it, your LLC is not legal. It doesn’t actually exist without it.
You can always complete the LLC registration procedure in Arkansas on your own. Yet, if you don’t want to get into this and would rather let someone else do it for you, you are free to delegate this task to one of the Best LLC Services you’ll find in our review.
All in all, the Certificate of Organization or Articles of Organization in Arkansas is a pretty basic and formal document that covers general information about your future entity to make it available to the public and keep it in the state records.
Similar to other formalities related to LLC formation in Arkansas, the Certificate of Organization content is regulated by the Arkansas Code. To be acceptable for registration in this state, the document should include the following data:
Whether you set up a single-member or a multi-member LLC, the Certificate of Organization could be signed by the LLC organizer. The latter is a person that will handle the filing process for you. Moreover, there is no need to mention all LLC members in the document.
Filing an LLC in Arkansas won’t hit your pocket too much. You can submit your LLC papers online and pay a filing fee of $45 or send them by mail which will cost you $50. All fees are fixed in a filing schedule you can find on the official website of the Arkansas Secretary of State.
Arkansas is one of the states that boast the fastest processing times. Your LLC docs will be reviewed, checked, and approved within two workdays from the date of their receipt. It’s a common rule for all filings. And for this reason, there are no expedited filing options in this state.
An Operating Agreement is a company bylaw establishing and legalizing internal covenants and commitments of the LLC owners. Those covenants refer both to the member rights and duties and to common positions in terms of managing and controlling procedures. Though this document is not a law requirement in the majority of US states including Arkansas, it’s highly advisable that you execute it for your LLC. You might ask why. Here is a number of reasons for that:
The biggest benefit of having a duly executed and signed by all LLC members Operating Agreement in place is that you can run your business your way and control it following your own rules. The thing is that this internal doc has a priority over default laws that set forth general state rules for company management. In case of a lawsuit, the court will rely on default laws unless you have an Operating Agreement. for your Arkansas LLC. Check Section 4-38-105 of the Arkansas Code for more regulations on this document.
An Employer Identification Number, EIN, or Federal Tax ID is a taxpayer passport for a business entity. Similar to a Social Security Number for individuals, this nine-digit code will serve as your company's numerical identifier for tax and government authorities.
An EIN is not a must for single-member LLCs that can report taxes using their owners’ SSNs. However, we still recommend getting an EIN no matter the number of LLC co-owners since you’ll need it for your business if:
Overall, an EIN is yet another brick in the strong wall of your business's legal independence. And obtaining it is not a problem at all. To acquire an EIN for your already registered Arkansas LLC, it’s enough to fill in an online form on the website of the Internal Revenue Service (IRS). It will take you no more than a few minutes and the EIN issue is free for all LLCs.
When your “business ship” is ready to hit the waters of a bigger business, you also need to get it properly equipped for that. It means there are a few other steps you’ll have to take after all formation formalities are over to ensure efficient operational support for your entity.
Can you use your personal checking account for business operations? Yes, you can. Is it a good idea? No, it’s not. Here is why:
Easier accounting: An accurate and well-organized accounting system is a warranty for proper financial planning. Mingled assets will hinder you from having a clear and true-to-life picture of your business financial state. Meanwhile, split assets will let you account for your incomes, expenses, and cash flows in a more convenient manner.
Business insurance is a sort of life vest for your LLC. Business is not only about success and achievements but also about challenges, problems, and accidents. With business insurance in place, you get added protection for your entity against many unexpected situations. To learn what types of insurance will best work for your company and business scenario, we recommend that you consult an insurance expert. At the same time, the most common types of insurance policies normally provided for different business activities include general liability and commercial property insurance, professional liability insurance, business income insurance, worker’s compensation insurance, etc.
There is a number of regulations set forth by the government that an LLC should keep up with to maintain good standing with the state and stay eligible.
Depending on the type of business activity your LLC will be involved in, you might need some sort of license or permit at a federal, state, or local level to lawfully operate your enterprise in Arkansas. It’s quite a sensitive issue for any LLC. So, don’t neglect it or let it ride. We suggest that you first check on the website of the Arkansas Department of Labor and Licensing and then get professional advice if you still have some questions about this.
When it comes to income taxes, Arkansas LLCs act as pass-through entities, and their incomes are taxable on their owners' tax returns under their personal tax rates. Besides, you’ll be exposed to Social and Medicare taxes and payroll taxes if you hire workers for your Arkansas LLC. On top of that, Arkansas imposes a franchise tax on all LLCs. You’ll have to pay it annually at a fixed rate of $150.
Under the Arkansas Code, you’ll have to file an annual report for your LLC in this state. You can do it either online or via regular mail. Notably, the above-mentioned franchise tax is payable as a part of the report submission process.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.