Many self-employed Arkansas residents are eager to start their businesses. The simplest and most rational solution to this issue is to join the ranks of sole proprietors.
Organizing and managing a business in this format is the least difficult in America and has no service pitfalls. Although, future business owners will have to adhere to certain norms. Also, be prepared that you will have to face some restrictions regarding the functions of your sole proprietorship.
So, the main task of this manual is to help you answer the essential question – is the business format of an individual enterprise right for you? And, of course, we will tell you which aspects to pay attention to while opening a sole proprietorship and how to set up a business structure in this vein properly.
The Proper Way To Start Business As The Arkansas Sole Proprietor
There is no algorithm for organizing the business work of an individual entrepreneur in Arkansas as for LLC. In addition, the state does not charge additional service fees for the formation or management of this type of business or company. Are you looking to become an individual business owner and start a sole proprietorship in Arkansas? – Just start working!
Though, you still have to go through several additional legal formalities. These service stages are optional. Although many sole proprietors prefer not to neglect them, compliance with these formalities guarantees the legal protection of their interests.
Applying For DBAs
Almost every company and business owner prefers doing business as a DBA. There are many benefits to running a business under an assumed name compared with an entity or LLC. We are talking primarily about creating the business image of your company. Potential clients and consumers will find this approach more professional and give you more confidence. It turns out that a company that uses the real name of its owner is often not competitive.
Let’s clarify that a company owned by sole proprietors can use the DBA to open and manage a business bank account. Customers will appreciate it as one more advantage in favor of the business owner, so they feel more comfortable.
To register DBA in Arkansas, you should act a bit differently than in all other American states. The procedure for registration of this type of individual entrepreneurial activity is more simple here. And the key point is that in Arkansas you are not required to register your administrator with the Secretary of State.
But you still need to clarify whether the name is available or it is occupied by some other enterprise. To do this, you can conduct business entity search quickly and conveniently.
Once you understand that the name is available, you can get a Certificate for an assumed name at the office of your local county clerk. How do I find the nearest clerk’s office? Go to this website and you will find it out.
You will also learn a lot of useful information on this topic if you read our full article. There you will learn about all the nuances of the registration process of a database administrator in Arkansas.
Clarification & Compliance with Tax Requirements
You can run your business in this format and not hire third-party employees. In this case, you do not need to obtain an EIN (Federal Tax Identification Number) because your Social Security number will replace it. Of course, it would be correct to take care of your confidentiality and still use the EIN and not the SSN.
The nature and the structure of the business activity of individual entrepreneurship determine the list of tax requirements that the state will put forward (as with LLC).
All businesses operating in the state of Arkansas must pay taxes according to their type of activity. So, if your company sells goods – you pay one type of fee. If you provide certain services, then the tax will be different for you.
Also, there are some industry-specific types of taxes. So, not to get confused about the variety of these taxes, try to make it easier for yourself with the search. Use Arkansas Taxpayer Access Point. Here you can register all tax payments, as well as get explanations on taxes you should pay.
Business Licenses & Permits
Are you going to start a business in Arkansas? Then there is good news for you – here you do not need to purchase a general license for individual entrepreneurs at all. But this does not mean that you are generally exempt from the need to obtain permissions here.
Depending on your business activity, you still need to get licenses and/or permits to conduct business legally.
Sole entrepreneurs in the state of Arkansas can obtain a variety of business permits. These can be licenses related to such fields as child care or general contracting, selling food, or renting out real estate.
In any case, whatever business you are engaged in, you must have a valid permit. To clarify this information, go to the Internet portals of the Arkansas State in the section business resources and search for agencies related to your field of activity.
Also, each city and county of Arkansas has its local regulations for licenses. Localities such as Little Rock, Fort Smith, Fayetteville, Springdale, and Jonesboro have their requirements for businesses.
Arkansas Sole Proprietor: The Notion & Essence
A sole proprietor is not a legal entity! But any corporation and limited liability company (LLC) has this status. As a sole proprietor, you run the business alone (register and manage it on your behalf). It is worth noting that this gives the business owner advantages, though, imposes additional obligations and responsibilities on him.
Make Sure to Pay Attention to the Following Three Aspects
There are obligations to pay taxes to the state
A business owner and an individual entrepreneur are the same people. It means that filing tax returns is not a requirement, as with an entity or LLC. You need to declare your income and expenses and fill out the declaration of an individual;
Business owners who are registered as sole proprietors have the right to enter into contracts on their behalf, unlike an entity. Also, receiving profit from clients, in checks they can indicate their name in the recipient column;
Flexible terms of business management
The advantage difference between individual entrepreneurship and any entity is the ability to combine work and personal assets. Whereas corporations and LLCs must separate personal assets from company assets. It has several positive and negative aspects. For example, if you have financial difficulties, creditors can seize or confiscate your personal property (house, car, etc.). In the case of corporations and LLCs (or any entity), creditors do not have this freedom, as their powers only apply to business assets.
Of course, the structure of doing legal business as a sole proprietor is greatly simplified while in Arkansas. You don’t even have to pay any commission fees provided for the entity or LLC. At the same time, based on the nature and structure of the business activity that you conduct, you will all have to go through a series of entity stages.
The issues of taxation, obtaining licenses, and permits require more detailed consideration. Also, pay attention to the possibility of obtaining and using DBA. These aspects are vital, as their omission can result in unnecessary legal penalties for you.
We have prepared this manual so that you can think over the structure of your business to the smallest detail. Manage it correctly and get more legal profit!