How to Form an LLC in Arkansas in 6 Easy Steps – 2024 Guide

Do you have a promising business concept and require assistance in launching it? Creating an Arkansas LLC can be a wise move for legal protection and tax benefits. With Arkansas recently revising its LLC regulations and embracing the Uniform Limited Liability Company Act (ULLCA), there is a surge of interest and a need for guidance on commencing an LLC in Arkansas.

Acquiring the knowledge of initiating an LLC in Arkansas is a straightforward process. We will provide you with a detailed, step-by-step manual for launching your business, along with responses to commonly asked questions about Arkansas LLCs.

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How to Get an LLC in Arkansas

Establishing your Arkansas LLC is a straightforward process that involves submitting a set of documents to the Arkansas Secretary of State. Nearly all the necessary forms for various actions, including amendments to prior submissions, can be accessed online.

1. Choose a Name for Your Arkansas LLC

The initial step in establishing your business is selecting an appropriate name. Before you embark on designing your logo, it’s essential to ensure the uniqueness of your chosen name, as it’s a prerequisite for associating it with your LLC. You can conduct a free Arkansas LLC search to verify name availability. 

Keep in mind that the Arkansas Secretary of State may reject your name reservation request if it fails to adhere to specific guidelines, including:

• Incorporating terms like “Limited Liability Company,” “Limited Company,” “LLC,” or “LC,” with or without punctuation.
• Including terms like “Professional Limited Liability Company,” “Professional Limited Company,” “PLLC,” or “PLC” if your company offers professional services.
• Avoiding words that might lead to confusion with a government agency.
• Ensuring it doesn’t closely resemble an existing Arkansas business name.

Setting your name apart is a crucial aspect of the LLC formation process. In cases where your preferred name resembles an existing business name, you can enhance its distinctiveness by:

• Specifying a specific geographic location if your businesses are located in different towns beyond a 100-mile radius.
• Highlighting specific services offered (e.g., “Lola’s Bakery” vs. “Lola’s Tax Services”).
• Incorporating relevant keywords.

Certain types of businesses require special approval from state licensing authorities, and this approval should be included with your application to gain the Secretary of State’s approval. These include names containing terms like “bank,” “trust,” or similar words, “engineer,” “engineering,” or similar terms, LLCs in the practice of medicine or dentistry, insurance companies, and names featuring “razorback(s)” or “Arkansas razorback(s).”

Once you’ve settled on a name, you can reserve it through the Secretary of State. If approved, the name will be reserved for 120 days, allowing you sufficient time to complete your LLC formation.

Insider Tip: You can choose to register your LLC under a formal name while conducting business under a different name. After forming your LLC, you’ll need to file an “Application for a Fictitious Name for LLC” on the Secretary of State’s website. This fictitious name is often referred to as a “DBA,” which stands for “doing business as.”

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2. Hire a Registered Agent in Arkansas

A “registered agent” is an appointed organization situated in Arkansas responsible for receiving official communications on behalf of your business. Once your LLC is established, you have the option to change your registered agent at no cost through the Secretary of State’s website.

How Do I Get an LLC in Arkansas for the Lowest Cost?

Registered agent service providers offer this assistance for as little as $49 annually. While you can act as your own registered agent, most business proprietors opt against it due to the legal obligation that a registered agent must be accessible at the designated address during all business hours. This can pose challenges for remote work, taking time off, or finding a substitute in case of illness.

Insider Tip: Serving as your own agent might not be the best choice since legal documents are typically delivered to that address. If you act as your own agent and have clients in your office, you could receive a lawsuit or other documents in their presence, potentially revealing information you prefer to keep confidential.

Our Picks of the Best-Registered Agent Services

ZenBusiness

When you partner with ZenBusiness, there’s no need to worry about the complexities of paperwork filing. This company provides an extensive array of LLC services, primarily dedicated to guaranteeing the accurate setup of your business, including the completion and submission of the necessary paperwork to the appropriate state government division. While ZenBusiness does charge for its services, customers often find that they receive excellent value for their investment.

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Northwest Registered Agent

Commencing a business entails a considerable amount of mandatory state paperwork, which can be overwhelming for new business proprietors. Northwest provides business services designed to assist entrepreneurs in locating the correct documentation, completing it accurately, and submitting it promptly to the relevant government agency. Apart from aiding you in the establishment of an LLC, Northwest also offers a range of supplementary services, including registered agent services, which can be valuable for new business owners.

>> Start Using Northwest Registered Agent >>

Incfile

Incfile provides an extensive resource library that assists novice business owners in determining the most suitable business structure to establish. Following this, Incfile offers guidance on paperwork and filing processes while simplifying concepts such as a registered agent, articles of organization, and EIN. The company enjoys a solid reputation and positive online reviews as well.

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3. Request a Federal Employer Identification Number (EIN)

Before formally establishing your LLC, you’ll require a federal tax identification number from the IRS, often referred to as an employer identification number (EIN) or federal tax ID. You can obtain this for free via the IRS website. Even if you don’t intend to hire employees, you’ll still need this number to enroll in Arkansas’s franchise tax system.

Insider Tip: While some states do not mandate EINs for single-member LLCs without employees that meet particular criteria, Arkansas differs in this regard, as it necessitates an EIN for the formation of any LLC.

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4. File Your Certificate of Organization

To complete your certificate of organization in Arkansas, you’ll need to provide the following details:

• LLC Name
• Principal place of business address (this becomes part of the public business record)
• Name and address of your registered agent
• Name and title of at least one member
• Federal Employer Identification Number (EIN)

You have two methods for submitting the certificate of organization:

The first option involves online filing through the Secretary of State’s website using a fillable form. This process includes selecting an effective date for your LLC and making a $45 payment.

The second option entails printing a PDF form and sending a $50 check or money order to the Arkansas Secretary of State at this address: Secretary of State, 1401 West Capitol, Suite 250, Little Rock, AR 72201.

Foreign LLCs

Foreign LLCs looking to conduct business within Arkansas must register with the Arkansas Secretary of State. The steps for foreign LLC registration in the state include:

• Ensure compliance with Arkansas LLC naming regulations and confirm the availability of your LLC name in the state through the Arkansas Secretary of State business name database.
• Designate an Arkansas registered agent.
• Submit an Application for a Certificate of Registration of Foreign Limited Liability Company, which can be done either online or via mail. The online registration filing fee is $270, while the fee for paper submissions is $300.
• Foreign LLCs are required to provide a certificate of existence from their home state.

Insider Tip: Perfecting the LLC formation process can be challenging initially. In Arkansas, it’s possible to amend your certificate of organization after your LLC is established, but amendments come with a cost of $22.50 for online filing and $25 for mail or in-person submissions.

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5. Create an Operating Agreement

Arkansas doesn’t mandate the submission of an operating agreement, but it’s highly advisable to establish one right from the start to define the operational framework for your business. 

An operating agreement essentially serves as a contract among the LLC members, making it a prudent move to consult with an attorney when drafting it, even if you initiate the process using a readily available online template.

LLC formation services can also assist in creating operating agreements for a fee, along with guiding you through the Arkansas LLC formation process. Typical components covered in operating agreements include:

• LLC Name
• Membership details
• Management structure (defaulting to collective decision-making by all members, referred to as “member-managed,” or the option to designate specific managers, known as “manager-managed”)
• Member and manager responsibilities
• Voting rights
• Distribution of profits and losses
• Procedures for meetings
• Buyout and buy-sell policies
• Succession planning
• Dissolution procedures
• Mechanisms for amending the operating agreement

Insider Tip: The Uniform Limited Liability Company Act (ULLCA) that went into effect in Arkansas in September 2021 stated that operating agreements were not obligatory. Nevertheless, the ULLCA allows for operating agreements to be “implied,” meaning they don’t necessarily have to be in writing and can be established based on the conduct of LLC members. 

To avoid any ambiguity in how your LLC should operate, it’s recommended to create a written operating agreement and secure agreement from all members involved.

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6. Fulfill Your Ongoing Obligations

Establishing an LLC in Arkansas is just the initial step. Ongoing obligations to maintain your business’s legality, particularly regarding tax responsibilities, must be considered.

Federal, State, and Local Taxation

If you choose this tax structure, you will be subject to federal income tax on your Arkansas LLC’s earnings, whether classified as a disregarded entity or corporation. Additionally, you’ll have to submit the Arkansas Corporate Franchise Tax of $150, due annually by May 1. Local tax requirements may vary based on your operational location.

Maintain Current Licenses

Professional licenses, such as medical or accounting certifications, may require periodic renewal. Operating a retail business or restaurant may necessitate specific licenses as well.

Insider Information: The Arkansas Small Business and Technology Development Center offers consultation services to state residents looking to launch a small business. Formulating a formal business plan prior to LLC formation can assist in navigating the licensure process and preparing for post-launch business operations.

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Arkansas LLC checklist

Naming Requirements

The name of an Arkansas LLC should adhere to the following criteria:

• It must be unique and distinguishable from the names of existing business entities registered with the Arkansas Secretary of State.
• The name must include the terms “Limited Liability Company,” “Limited Company,” or their abbreviations “LLC,” “L.C.,” “LC,” or “L.L.C.” It’s acceptable to replace “Limited” with “Ltd.” or “Company” with “Co.”
• For professional LLCs in Arkansas, the name should incorporate the phrases “professional limited liability company,” “professional limited company,” or their abbreviations “PLC,” “P.L.C.,” “PLLC,” or “P.L.L.C.”
• The name cannot include the name of an individual who isn’t a member of the LLC, with the exception of a deceased member.

Required Formation Documents and Filing Fees

Fees for Limited Liability Company Name Reservation and Articles of Organization filing:

• Online filing for Name Reservation: $22.50, Postal mail filing: $25
• Online filing for Articles of Organization: $45, Postal mail filing: $50

Registration Procedure

In Arkansas, you establish an LLC by submitting the Articles of Organization to the Arkansas Secretary of State.

Additional Legal Obligations

• Annual state taxes: LLCs are obligated to make a yearly payment of at least $150
• Annual franchise tax report: Due annually on May 1
• Business licenses: Mandatory for specific business types
• Arkansas DFA registration: Compulsory for certain business categories

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How to Get an LLC in Arkansas – FAQ

Is an LLC Right for Me?

If you’re interested in starting an LLC, it’s important to understand the concept of an LLC. An LLC, or “limited liability company,” is a business structure that combines the legal protection against liability found in corporations with a reduced administrative burden. Each state has its own specific requirements for establishing an LLC, which can have one or more “members” or owners, whether they’re individuals or other business entities.

By default, an LLC is considered a “pass-through” entity, which means that the income generated by the LLC passes through to the individual members and is taxed at their personal income levels. 

However, an LLC has the option to elect corporate taxation, which involves taxation at both the business income level and the members’ personal income levels, a scenario often referred to as double taxation. This election is made by submitting a particular form to the IRS, and it’s advisable to consult with an accountant to weigh the advantages and disadvantages of different tax statuses.

If you already have an LLC established in a different state and wish to conduct business in Arkansas, it’s necessary to register your out-of-state LLC as a foreign entity in Arkansas.

Can I Start an LLC Online?

What is the most convenient method for obtaining an LLC in Arkansas? You have the option to submit your LLC application online, which is a straightforward and cost-effective process that Arkansas has streamlined. Utilize Arkansas’s online business filing system to finalize your application.

Read more: Cost to Start an LLC

Can I Form an LLC by Myself?

Indeed, the legal requirement for an LLC dictates that it must have at least one member. That member can be you! You might come across the terms “single-member LLC” (referring to LLCs with only one member) or “multi-member LLC” (indicating multiple members), but both types are established in the same manner.

A single-member LLC is also referred to as a “disregarded entity” by the IRS. This term reflects how the LLC’s taxation is treated. Essentially, it’s “disregarded” as a separate entity from the member. In this case, the LLC’s income is considered identical to the member’s personal income and is subject to taxation accordingly.

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