This guide on how to form an LLC in Arkansas covers the necessary steps you need to set up and run your LLC. An Arkansas LLC is a way to legally structure your business. It provides liability protection for your personal assets in case your business is sued or undergoes financial issues.
It’s also possible to use an LLC to hold assets like real estate, vehicles, etc. To create an LLC, the organizer has to file Arkansas Articles of Organization with the state. Before you do that, there are a few necessities you must consider. Similarly, a few things are needed after the start of the Arkansas LLC to keep it running smoothly.
Let’s get to work!
1. Choosing An Arkansas LLC Name
Zeroing on the right name is the first step. It might seem trivial or simple, but remember that many LLC filings end up tripping on the naming requirements.
Arkansas requires that the chosen LLC name be unique and distinguishable from other entities. This means that the name shouldn’t be the same as another entity registered with the state, which is simple enough.
Equally important, the name shouldn’t be confusingly similar to an already existing name either. This is the part you have to be extra careful about when choosing a name for the Arkansas LLC.
A quick way to check for name availability is to run a Business Entity Search on the Arkansas Secretary of State website. Arkansas also accepts naming queries via phone, so you can call 501-682-3409.
LLC Name Designators
Arkansas LLCs must end their name with a proper designator. Well, “LLC” is the most commonly used designator, but the following are acceptable as well:
- Limited Liability Company
- LLC
- L.L.C.
- LC
- L.C.
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
LLC Name Reservation (Optional)
You can reserve a name for your LLC in Arkansas without going through the creation of a company. To do this, you need to file an Application for Reservation of Entity Name with the Secretary of State.
You can file this application online using the Corporations Online Filing System or choose to download and file the application via postal mail. The filing fee is $22.50 if done online or $25 for filings via mail.
2. Arkansas Registered Agent
A registered agent is an agent for service of process in Arkansas. This is a person or entity that agrees to receive service of process on behalf of your LLC. Service of process includes legal documents like lawsuits, summons, subpoenas, etc.
Every Arkansas LLC must maintain a registered agent in the state. The registered agent must have a physical street address in Arkansas; PO Box or similar addresses aren’t accepted. There is quite some flexibility in choosing a Registered Agent for your Arkansas LLC. This can be:
- Any adult who is a legal resident of the state
- A business entity that is allowed to do business in the state and maintains an office in Arkansas.
The latter also includes Commercial Registered Agents. These are a popular choice because they can easily maintain conventional office hours and easily receive (and forward) service of process. Some agents also offer services in helping set up your Arkansas LLC.
3. Arkansas LLC Articles Of Organization
Filing Articles of Organization is the biggest step to forming your LLC in Arkansas. The LLC comes into existence as soon as the Articles of Organization are approved by the Secretary of State.
You can file this form online using the Corporations Online Filing System. Requisite payments can be made using MasterCard, Visa, Discover, and American Express. The cost of filing Articles of Organization online is $45. Processing and approval usually take 2-3 business days.
If you prefer filing via mail, you’ll have to download and fill form LL-01. The filing fee for this form is $50, payable via check or money order. Processing and approval of Articles of Organization sent via postal mail can take 1-2 weeks. The mailing address is:
Arkansas Secretary of State
Business & Commercial Services Division
1401 W. Capitol Avenue
Suite 250
Little Rock, AR 72201
While filing via mail doesn’t seem all that ideal, it does have its merits. Arkansas online filing system can get somewhat complex.
Once the Arkansas LLC is approved, you’ll receive a receipt, stamped and approved copy of the articles of organization, and a certificate of approval.
4. Get An Operating Agreement
As with most states, Arkansas doesn’t mandate for LLCs to have an Operating Agreement. And as with most cases, the agreement remains highly advisable and you should get it.
An operating agreement is an internal document of the LLC and doesn’t need to be filed with any government agency. However, its existence might also serve as proof of the proper functioning and management of your LLC.
You can use the agreement to lay the groundwork for the professional approach of your company. Creating by-laws, dispute resolution mechanisms, and explaining company rules can be a part of this document.
Additionally, it may define the roles and responsibilities of the LLC members, their share in the profits, voting rights in the company, and how much of the LLC is owned by each member.
While multi-member LLCs benefit greatly from having an Operating Agreement, single-member LLCs shouldn’t shy away from one either.
5. Federal Tax ID (EIN)
You can quickly get an Employer Identification Number (EIN) for your LLC by filing online with the IRS. There is no filing fee for getting an EIN. However, you should only apply for one after your LLC has been approved by the Arkansas Secretary of State.
In case online filing isn’t possible, you’ll have to download and file Form SS-4. IRS accepts filings of this form via postal mail and fax. Online filings are the fastest and are processed instantly. Filings via fax can take a few days to process, while mail filings can take weeks.
6. Arkansas LLC Annual Franchise Tax Report
Every LLC in Arkansas must file an Annual Franchise Tax report. This is a flat fee of $150, irrespective of the business or revenue of the LLC. Until recently, this report was filed with the Secretary of State.
However, starting in 2021, the Annual Franchise Tax Report is filed with the Arkansas Department of Finance and Administration (DFA). Franchise tax is due the year after your LLC was formed and must be paid by May 1 every year. It’s possible to file early, starting from January 1.
For example, if your Arkansas LLC was formed on January 30, 2020, the report is due by May 1, 2021.
If you prefer to file the report online, the filing and payment can be completed through Arkansas Taxpayer Access Point (ATAP). It’s also possible to file the report via mail, fax, or in person.
The fax number is 501-682-4974. However, it’s currently for report only and doesn’t include a payment option.
For filings via mail, you can include a check and money order with the report and mail it to:
PO Box 8053,
Little Rock,
AR 72203-8053
For in-person filings, the address is:
1900 W 7th St,
Ragland Bldg.,
Suite 1130,
Little Rock,
AR 72201
7. Business Licenses, Permits, And Taxation
Apart from the Franchise Tax, your Arkansas LLC may also have to consider other taxes, licenses, and permits to operate in the state. These often depend on the industry of your LLC and the county/city of operation.
As such, you’ll have to consider local, state, and federal requirements and taxation. For example, the state may impose taxes like sales and use tax and income tax (amongst others).
For federal taxation, LLCs get treated as pass-through entities by default. However, this can change depending on how you structure your Arkansas LLC.
For obvious reasons, the LLC can’t be lax with taxation and licensing requirements. It’s a good idea to talk to the city/county office and confirm what the requirements are for local permits and licenses. Alternatively, it’s often worthwhile to hire a professional to handle the taxation requirements so your business stays on the right side of the law.