Starting LLC in Arkansas: Peculiarities & Detailed Manual
Want to start an LLC in Arkansas? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Arkansas, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Arkansas LLC: The Notion & Essence
Many Arkansas business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Arkansas puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Arkansas’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Arkansas obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Arkansas’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Arkansas and will help you to start an LLC. The agent can be an Arkansas resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner.
The list contains applications from individuals or legal entities, as well as enterprises of local and foreign places of registration. To do this, a person or organization makes a request addressed to the Secretary of State, hand-sign this application, indicating the intention to get on the list as a registered agent.
What you should specify in the application: (1) the correct personal data of an individual or the name, type, and form of the organization; (2) determine a kind of activity that a commercial registered agent, individual or organization conducts in a particular state and indicate the name of this activity in the application; (3) the current place of registration of the organization, or individual, to timely deliver all necessary documents and other regulations, as well as to promptly provide document processing services to the organizations represented.
A registered agent guarantees an excellent reputation for your Arkansas LLC. Also, if your business gets worse, Arkansas can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Arkansas, you must file the Articles of Association with the Arkansas State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
To apply, go here. The applicant chooses the way to submit the request – via the Internet or by filling out a paper form.
The applicant pays for the services on the following Arkansas rates: 45 US$ for a paper form of LLC application and sending that by mail. And the service costs 50 US$ if an individual or an organization submits all documents online.
The waiting period for processing an application in the Arkansas state is: if the submission of documents to form an LLC goes online, the processing lasts no more than 2-3 working days. If the applicant submits a paper form of the application and sends it by mail – the waiting period is up to 14 working days. If the applicant has made some mistakes, he has to redo them, which means that the processing time of the application will increase.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Arkansas, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
The Arkansas tax system includes several types of fees.
First, the LLC organization has to pay income tax to the state treasury using three ways.
- In a case of an individual entrepreneur, the LLC owner will pay fees in the form of personal income tax.
- If LLC of Arkansas has a “Partnership” form, then taxes are deducted by submitting an income fee return of the partnership. A detailed guide on this tax payment type you find on the Internet.
- The third type of fee in Arkansas is the corporate income tax. You pay it if your organization operates as a corporation.
In addition to the taxes listed above, organizations operating in Arkansas contribute a franchise tax to the treasury of the State Secretary annually. The amount of the contribution differs, depending on the type of franchise. You can promptly pay this tax through the Internet portal. Also, the option of payment by mail is available. 150 US$ – the LLC franchise tax annually.
An LLC organization located in Arkansas state takes income tax from its employees. You will find the details on this tax procedure on the Arkansas Department of Finance and Administration website.
Also, the state of Arkansas supports tax measures related to unemployment insurance. The details of these taxes, and the specifics of state measures and support in the field of unemployment in Arkansas, can be found here.
All organizations that have the form of an LLC in the territory of Arkansas that sell goods or services must pass the registration procedure as a Service Provider. All these organizations pay the accepted income tax. Also, at the moment, Arkansas has a one-time rate for paying the tax – 50US$. For details, go here.
You have to pay 6.5% sales tax, as well as some other forms of taxes in the Arkansas state. This requirement applies to those LLCs that supply certain categories of goods and services to the market.
For entire instructions on taxation for different types of businesses in Arkansas at the moment, go here.
Local Tax Business Demands
If you do business in Arkansas, then you also pay local tax contributions. It depends on the localization of your organization in this state. To find up-to-date information about the taxes of a particular place, use their Local Tax Lookup tool.
Stage №6: Getting Business Licenses & Permits
The applicant should be aware that in addition to tax contributions on sales, a special license is needed by all the business enterprises. There is no common licensing document for business enterprises in Arkansas. You must purchase this license for the operation of your LLC.
Federal licensing requirements for all the business fields are met in the state of Arkansas. You will find out the details of federal licensing if you go here.
If the type of activity of your business goes beyond the list of industries regulated by federal legislation, you should obtain a state license. These can be such types of activities as the organization of contractors, professional sports coaches, nutritionists, court reporters, and so on. To get up-to-date information on professional licensing boards, visit the website Arkansas.gov to determine which industry licenses you need.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Arkansas Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
If you have a business and receive income from this activity, you must report on it. So, to report on your income you should fill a specific template where you enter the current indicators.
Here you make not only the profit for the year but also your expense. To get a detailed report form and instructions for filling it out, click here. You can also download the whole file if you click this link.
Referring to the services of a qualified accountant
Today any LLC must provide an annual report on its activities to the state authority. To download, fill out and send the report, go here. Keep in mind that if you are going to send the report by mail, a commission for forwarding will be charged – 15 US$.
The report includes data about your business, changes in the form and type of activity during the year, details on the registered agent, etc.