How To Start an Arkansas LLC
By Bazal Razzaq
Updated: August 01, 2023, 12:30pm
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- Select a name for your Arkansas LLC
- Create a business plan for your company
- Hire a registered agent
- Prepare and file Articles of Organization
- Draft an Operating Agreement for your Arkansas LLC
- Apply for an EIN(Employer Identification Number)
- Submit the Statement of Information
- Final Word
- How To Form An LLC In 50 States
- Frequently Asked Questions (FAQs)
With its vibrant business environment and a wealth of opportunities, Arkansas is the ideal place to bring your business vision to life. If you’re looking to form your very own Arkansas LLC, our step-by-step guide will walk you through the process.
#1 Select a name for your Arkansas LLC
First, you need to select a legally proper and unique name for your Arkansas Limited Liability Company. The law requires your name to differ from any other registered business entity’s name.
Before you begin filing any necessary documentation and designing the logo, you need to finalize a legally compliant name that isn’t already taken by any other registered business.
While picking a name for your business, it’s best to keep the following things in mind,
- Pick a name that’s relevant to your LLC and perfectly reflects your products and services. A clear and original name is always for the win!
- Also, the name should be easy to remember and spell. Avoid complex spellings or using obscure words that may confuse potential customers.
- Include terms like “LLC” at the end of your business name. It should end with one of the following abbreviations to comply with Arizona naming regulations:
- Limited Liability Company
- Limited Company
- LLC(Most people prefer this one)
- Avoid using words like “corporation,” “bank,” and “university” that may be restrictive or require additional approvals.
- Avoid using terms like “association,” “corporation,” “incorporated,” or any abbreviations of either term (“assoc.” “corp.” or “inc.”)
- It goes without saying, but your name shouldn’t include or be indicative of any obscene, vulgar, or forbidden words.
- Make sure that your chosen LLC name isn’t already being used by another company and isn’t the same as any other company’s name. If unsure, you can check the United States Patent and Trademark Office (USPTO) database and decide accordingly.
Before we proceed with our second point, here are two additional factors to help you decide and secure a name for your Arkansas LLC.
- Check for name availability: We understand that you can’t possibly guess which name is available for use, so we recommend performing a quick Arkansas LLC search online on the Secretary of State Business Services page.
- Name Reservation: Once you shortlist a name, you have the option to reserve that name with the Arkansas Secretary of State. By reserving a name, you can keep that name safe while you focus on the other stuff.
#2 Create a business plan for your company
A well-drafted business plan is like a roadmap for your LLC. It’s basically a document explaining what you want to do with your business and how you plan to do it. It includes information about what the business will sell, information on potential customers, how it will make money, and how it will grow over time. You can think of it as a plan that helps the people running the business know where they’re going and how to get there.
An affordable business plan can generally include the following details,
- A brief summary of your LLC
- Complete and thorough market research
- Details of Your products and services
- What sets your business apart from others?
- Marketing and promotional strategies
- Who are your customers?
- How do you plan on reaching those customers?
- Financial goals and management
The more a business plan is concise, well-organized, and tailored to your specific business, the better it is for your LLC. Remember to periodically review and update your document as your business evolves.
A solid business plan not only helps you secure funding from investors but also serves as a strategic tool to guide your LLC toward success.
#3 Hire a registered agent
Like most states in America, Arkansas requires every entrepreneur to appoint a registered agent for their LLCs. So, who is a registered agent? A registered agent is an individual or service authorized to receive all important official, legal, and financial notifications and documents for your LLC.
There are a lot of names a registered agent may be known by in different US states, including,
- Statutory Agent
- Resident Agent
- Agent for Service of Process
- Process Agent
- Corporate Agent
- Commercial Registered Agent
- Authorized Agent
- Service Agent
- Professional Registered Agent
Additionally, just like the name, the role and responsibilities of a registered agent may vary state by state, so it’s important to understand the requirements and obligations associated with this position in your location.
The particular standards for being a registered agent for an Arkansas LLC are:
- The registered agent can be either an individual who is a resident of Arkansas or a business entity that is authorized to conduct business in the state.
- Additionally, they must have a physical street address in Arkansas(a P.O. Box will be considered insufficient as the address).
- They should be available at their Arkansas address during regular business hours(typically 9:00 AM to 5:00 PM), ensuring they receive important documents and notifications promptly.
- The agent needs to maintain reliable communication channels to promptly inform the company of any important documents received.
Lastly, make sure you list the agent’s name in the business’s public records, obviously, as per your state’s requirements.
#4 Prepare and file Articles of Organization
To properly register your LLC as an authorized business in Arkansas, you need to file an Articles of Organization document with the Secretary of State’s office. For a domestic LLC, you need to file Form LL-01, and in the case of a Foreign LLC, file Form FL-01.
Your document should include the following details:
- The name and address of your Arkansas LLC
- LLC’s duration outlining for how long it will exist
- The name, address, and contact details of your registered agent
- Details included in your Articles of Organization
- The main goal of your LLC
- Daily operations and activities
- Allocation of profits and losses between the members/owners.
- Voting procedures
- Rules for adding new members or dealing with members who leave
- Management structure
- Details about the members/owners and their contributions
- Liability and Indemnification clauses
If you submit your form online, there is a filing fee of $45 and $50 if done through mail or in person.
The Filing Address is:
Arkansas Secretary of State
1401 W. Capitol Ave.
Little Rock, AR 72201
#5 Draft an Operating Agreement for your Arkansas LLC
Until recently, it was mandatory for an LLC in Arkansas to have an Operating Agreement. Now, even though it isn’t a legal requirement in the state, having one in place is always a great idea! It shows your genuine long-term plans for the business and gives it a professional image.
The agreement also sets clear rules and guidelines that all members and owners must agree to follow. A well-mapped-out agreement usually includes the following details:
- Basic information about the LLC
- Formation and Purpose
- Owners/Members’ Information
- Capital Contributions
- Profit and Loss Allocation
- Management and Voting
- Rights and Responsibilities of the members/owners
- Meetings and Voting Procedures
- Transfer of Membership Interests
- Dissolution and Liquidation
- Buyout and Buy-Sell Provisions
- Books and Records
- Indemnification and Amendments
- Miscellaneous Provisions
A readily accessible and well-written agreement is helpful for many reasons, like resolving fights, misunderstandings, and confusion that may arise over financial agreements and other potential lawsuits. If there is no operating agreement, the courts will base their judgments on state law, which may not necessarily align with what’s best for your LLC and its members/owners.
#6 Apply for an EIN(Employer Identification Number)
An EIN is a unique nine digit issued by the IRS (Internal Revenue Service) in America. The number is usually formatted as XX-XXXXXXX. It provides official identification for taxation and is quite similar to the SSN.
While an EIN is best known as an “Employer Identification Number.” It also has some other names and acronyms, including,
- Federal Employer Identification Number (FEIN)
- Federal Tax Identification Number (FTIN)
- Tax ID Number
- Employer Tax ID
- Business Tax ID
- Federal ID Number
- IRS ID Number
Properly termed the Federal Employer Identification Number, it identifies your LLC as a business entity and keeps track of a business’s tax reporting. You can easily obtain your EIN by mail or online through the IRS website. They’re also pretty helpful for single-member LLCs because they protect your Social Security Number (SSN) from identity theft and keep your personal information private.
An EIN helps your business to,
- Pay and handle your taxes to the government (both state and federal).
- Open a professional bank account.
- Apply for multiple business licenses and permits.
- Conduct daily business operations.
- Hire employees for your LLC.
#6 Submit the Statement of Information
The last but essential step for forming your Arkansas LLC is correctly filing your Statement of Information. This Statement is a crucial document that provides vital information about your company to the state. In different states, it’s known by different names, including,
- Statement of LLC Information
- Annual Report
- Biennial Statement
- Periodic Report
- Statement of Authority
- Statement of Members
- Statement of Officers
- Statement of Managers
- Business Entity Report
- Information Update Form
- Entity Information Statement
- Certificate of Information
The specific name may vary state by state and the type of business entity being registered. Always verify the correct name and requirements with the appropriate state authorities when submitting the required documentation.
Generally, an annual report should include the following details,
- The legal name of the LLC.
- The primary physical location of the business
- The official mailing address
- The name, contact details, and address of the registered agent
- The names, contact details, and addresses of the owners/members, officers, or managers of the business
- Business Purpose
- The date when the information provided in the Statement becomes effective.
For an Arkansas LLC, the deadline to submit an Annual Report/Statement of Information is May 1st of each year, and if you miss the deadline, there is a late fee of $25 per month, up to a maximum of $300. Along with the report, you need to pay the annual franchise tax, which is a fee of $150 for LLCs.
You can file the report online through the Arkansas Secretary of State’s website. Filing the report and paying the franchise tax on time will help keep your LLC in good standing with the state.
Once your Arkansas LLC is a registered entity, it opens doors for you to carry out multiple formalities, like,
- You can get the required permits and licenses to run your LLC. These could include health department permits, zoning permits, and others. Some states may need a seller’s permit for sales.
- Also, register your business with the state’s tax agency so your taxes are filed correctly.
- Open a separate bank account, especially for your business, which will ultimately help you manage your finances better.
- Apply for a business credit card to separate your personal and business expenses.
- Get insurance to protect your business from unexpected problems.
- You can also protect your business name and logo with a trademark, which gives you exclusive rights to use them. Doing this will also prevent others from copying or using them without your permission.
We also have blogs on what else needs to be done to maintain an LLC and some tips or tricks that help make maintaining an LLC much easier, just in case you were wondering!
Also, if you’re planning to hire new employees for your Arkansas LLC, here are some rules you should keep up with,
- Ensure that your new employees are allowed to work in the US.
- Let the state know about your new hires by reporting them.
- Get workers’ compensation insurance to cover your employees.
- Deduct employee taxes from their paychecks as required.
- Display workplace compliance posters in visible spots around your workspace.
In Arkansas, not every LLC needs a general business license from the state. The main license that many businesses must get is the sales tax permit, also called a seller’s permit. This permit is for businesses that sell or lease products or services that usually have sales tax if sold directly to customers.
If your LLC sells specific goods like alcohol or tobacco or operates in a different county or municipality with its own rules, you might need additional permits. The Arkansas Department of Workforce Services can provide more information and details on what permits your LLC may need based on what you sell and where you operate.
That’s it! That was all you might need to know before finally forming that LLC in “The Natural State” of the United States.
Frequently Asked Questions
An LLC offers several benefits for entrepreneurs in Arkansas. It provides limited liability protection, separating your personal assets from business debts and liabilities. Additionally, an LLC allows for flexible management, pass-through taxation, and ease of operation, making it an attractive option for small businesses.
A Registered Agent is a person or entity designated to receive legal documents and official correspondence on behalf of your LLC. Arkansas requires every LLC to have a registered agent with a physical address. This ensures timely delivery of important documents to your business.
Yes, there are ongoing obligations to maintain your LLC. You’ll need to file an Annual Franchise Tax Report and pay the $150 franchise tax fee by May 1st of each year. Additionally, ensure you adhere to any necessary business licenses, permits, and compliance requirements.
The processing time for forming an LLC in Arkansas can vary depending on how you file. Online filings typically have quicker turnaround times and may take a few business days. Mailed applications may take a few weeks to process.
Though not legally required, having an Operating Agreement is strongly recommended for LLCs in Arkansas. This document outlines the internal workings of your business, including management roles, profit-sharing, and decision-making processes, providing clarity and preventing potential disputes among members.