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If you have an excellent business concept and require assistance to commence, you might consider establishing an Arkansas LLC for legal protection and tax benefits.
Arkansas has recently repealed its LLC regulations and embraced the Uniform Limited Liability Company Act (ULLCA) as the twentieth state to do so. Consequently, there is considerable curiosity and a demand for clarification on how to initiate an LLC in Arkansas.
Acquiring knowledge on establishing an LLC in Arkansas merely necessitates some preliminary investigation. We will furnish you with a comprehensive, step-by-step manual for launching your enterprise, along with responses to frequently asked questions regarding Arkansas LLCs.
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How to Get an LLC in Arkansas: 6 Steps
Forming your Arkansas LLC is a straightforward process that involves submitting necessary paperwork to the Arkansas Secretary of State.
The online platform offers a wide range of forms for various actions, such as making amendments to previous filings. Rest assured, creating and managing your LLC in Arkansas is convenient and accessible.
1. Choose a Name for Your Arkansas LLC
The initial step in launching your business involves naming it. Prior to embarking on logo design, ensure that your chosen name is available and unique for your LLC. Conducting a complimentary Arkansas LLC search can confirm its availability.
However, even if it appears available, the Arkansas Secretary of State may reject your name reservation request if it fails to meet specific criteria:
- Must incorporate terms like “Limited Liability Company,” “Limited Company,” “LLC,” or “LC,” with or without punctuation
- Should include terms like “Professional Limited Liability Company,” “Professional Limited Company,” “PLLC,” or “PLC” for businesses offering professional services
- Must avoid terms that might create confusion with a government agency
- It should not bear too much resemblance to an existing Arkansas business name
Distinguishing your name is crucial when determining the process for obtaining an LLC. In Arkansas, if your desired name resembles an existing business name, employing the following strategies can aid in setting it apart and improving your likelihood of approval:
- Incorporating a specific geographic location, especially if businesses are located in different towns beyond a 100-mile radius
- Specifying the services offered (e.g., Lola’s Bakery vs. Lola’s Tax Services)
- Including relevant keywords
Certain types of businesses necessitate special approval from the relevant state licensing authorities, which must accompany the application for approval from the Secretary of State:
- Businesses with names containing “bank,” “trust,” or similar terms
- Businesses with names containing “engineer,” “engineering,” or similar terminology
- Limited Liability Companies (LLCs) involved in medical or dental practices
- LLCs operating as insurance companies
- Businesses with names featuring “razorback(s)” or “Arkansas razorback(s)”
After selecting a name, you can reserve it through the Secretary of State. If approved, the name will be reserved for 120 days to complete the LLC formation process.
Bonus Tip: You have the option to register your LLC under a formal name and conduct business under a different name. To accomplish this, following the LLC formation, you must submit an “Application for a Fictitious Name for LLC” via the Secretary of State’s website.
This fictitious name, also known as a “DBA” (doing business as), allows you to operate under an alternative name.
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2. Hire a Registered Agent in Arkansas
In Arkansas, a “registered agent” is an entity specifically assigned to receive official correspondence for a business. Once your LLC is established, you have the option to freely update your registered agent through the Secretary of State’s website.
How Do I Get an LLC in Arkansas for the Lowest Cost?
Registered agent companies offer this service at a minimum cost of $49 per year. While you do have the choice to act as your own registered agent, many business owners opt not to due to the legal obligation of having a registered agent present at the designated address throughout all business hours.
This requirement can pose challenges for those who wish to work remotely, take time off, or find a substitute in case of illness.
Insider Information: It might not be advisable to act as your own representative since legal documents are sent to that location. If you choose to represent yourself and have clients visiting your office, there is a possibility of being served with a lawsuit or other papers in their presence, potentially revealing information that you wish to keep confidential.
Our Picks of the Best-Registered Agent Services
Tailor Brands is committed to supporting entrepreneurs by delivering an extensive range of services tailored to their requirements. These services cover LLC formation, compliance, and branding/online presence.
The Elite Plan, among the three available options, is highly recommended. This plan stands out by incorporating all the essential elements for ambitious entrepreneurs to successfully engage with their target audience, a crucial factor in building a robust online presence.
Entrepreneurs often find themselves overwhelmed by the extensive paperwork required to start a business.
Northwest provides valuable LLC services that assist in navigating this process, ensuring new business owners can easily locate the necessary documentation, complete it accurately, and submit it promptly to the appropriate government agency.
In addition to facilitating LLC establishment, Northwest offers an array of supplementary services aimed at supporting new owners, such as registered agent services. By providing comprehensive assistance and guidance, Northwest empowers entrepreneurs to confidently embark on their business ventures.
Bizee provides an extensive collection of resources aimed at assisting individuals who are venturing into business ownership for the first time in determining the most suitable type of business to establish.
In addition, Bizee offers support with documentation and filing processes while simplifying complex concepts such as registered agents, articles of organization, and EINs. The company boasts a solid reputation and has received highly positive feedback from online sources.
3. Request a Federal Employer Identification Number (EIN)
In order to officially establish your LLC, it’s necessary to obtain a federal tax number from the IRS, commonly known as an employer identification number (EIN) or federal tax identification number.
You can make a request for this number free of charge through the IRS website. Even if you have no plans of hiring employees, obtaining this number is still essential in order to register for Arkansas’s franchise tax system.
Insider Information: While some states don’t mandate single-member LLCs without employees and meeting specific criteria to obtain an EIN, this exemption doesn’t apply in Arkansas. Regardless of these circumstances, acquiring an EIN is a prerequisite for forming any type of LLC within the state.
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4. File Your Certificate of Organization
To complete your certificate of organization, Arkansas will necessitate the following details:
- The name of your LLC
- The address of your principal place of business, which will be included in the public business record
- The name and address of your registered agent
- The name and title of at least one member
- Federal Employer Identification Number (EIN)
There are two methods for submitting the certificate of organization. The initial approach involves completing an online form on the Secretary of State’s official website.
This form is fillable and requires selecting a specific date for your LLC to become effective. Along with the form, you will need to pay a fee of $45.
Alternatively, you have the option to print out a PDF version of the form. After filling it out, you can submit it along with a check or money order worth $50 to the Arkansas Secretary of State by mail. The address where you should send these documents is as follows: Secretary of State, 1401 West Capitol, Suite 250, Little Rock, AR 72201.
Foreign LLCs
LLCs established outside Arkansas intending to conduct business within the state must register with the Arkansas Secretary of State.
Foreign LLCs can register to operate in Arkansas by following these steps:
- Adhere to Arkansas LLC naming regulations and verify the availability of your LLC name in the state using 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 either online or via mail. The online filing fee is $270, while the mail-in filing fee is $300
- Foreign LLCs must procure a certificate of existence from their home state
Insider Tip: Perfecting the LLC formation process takes time. In Arkansas, you have the option to amend your certificate of the organization after LLC formation, with online amendments costing $22.50 and those submitted by mail or in person costing $25.
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5. Create an Operating Agreement
In Arkansas, there is no legal requirement to file an operating agreement. However, it’s highly advisable to have one in place right from the start in order to establish the desired structure and management of your business.
An operating agreement serves as a contract between the LLC members, and seeking guidance from an attorney when creating one is recommended, even if you utilize a readily available template online. This ensures that all parties involved are clear on their rights and responsibilities within the company’s framework.
Companies specializing in LLC formation offer services to draft operating agreements for a fee, along with assistance in navigating the process of establishing an LLC in Arkansas. Typically, operating agreements encompass details regarding:
- LLC Name
- Membership
- Management structure (which defaults to collective decision-making by all members, known as “member-managed,” but can also entail designating specific managers, referred to as “manager-managed”)
- Responsibilities of members and managers
- Voting rights
- Distribution of profits and losses
- Conduct of meetings
- Buyout and buy-sell arrangements
- Succession planning
- Dissolution procedures
- Procedures for amending the operating agreement
The filing process for LLCs in Arkansas, referred to as the Uniform Limited Liability Company Act (ULLCA), has undergone changes as of September 2021. According to the ULLCA, operating agreements are no longer required by law.
However, it’s important to note that operating agreements can still be established through implied means, allowing them to exist without being explicitly written down. These implied agreements are formed based on the actions and behaviors of the LLC members.
To avoid any potential confusion or uncertainty regarding how your LLC should operate, it’s highly recommended to create a written operating agreement that all members consent to and agree upon. This ensures clarity and consistency in your business operations.
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6. Fulfill Your Ongoing Obligations
Understanding the process of establishing an LLC in Arkansas is just the initial step. It’s crucial to be aware of the ongoing obligations necessary to maintain your business’s legality, particularly when it comes to tax responsibilities.
Pay Federal, State, and Local Taxes
Should you choose to opt for this taxation method, any earnings from your Arkansas LLC will be subject to federal income tax. This applies whether your LLC is considered a disregarded entity or a corporation.
Additionally, you will be required to file an Arkansas Corporate Franchise Tax of $150 by May 1st annually. It’s important to note that there may also be local taxes applicable depending on the location of your business operations.
Keep Necessary Licenses Up to Date
In order to engage in certain occupations, such as medicine or accounting, it’s necessary to possess professional certifications that need to be renewed on a regular basis. Additionally, obtaining specific licenses may be required for running a retail establishment or restaurant.
The Arkansas Small Business and Technology Development Center provides consulting services to individuals who are interested in launching a small business within the state. Prior to establishing your LLC, it’s recommended to create a comprehensive business plan that will assist you throughout the licensing procedure and provide insights into what you can anticipate once your business is operational.
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Arkansas LLC Checklist
Naming Requirements
Here are the revised guidelines for naming an Arkansas LLC:
- The name must be unique and distinguishable from existing business entities registered with the Arkansas Secretary of State
- It should include the terms “Limited Liability Company,” “Limited Company,” or their respective abbreviations: “LLC,” “L.C.,” “LC,” or “L.L.C.”. Using “Ltd.” instead of “Limited” or “Co.” instead of “Company” is acceptable
- For professional LLCs in Arkansas, the name must incorporate “professional limited liability company,” “professional limited company,” or the 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, except for a deceased member’s name
Required Formation Documents and Filing Fees
- Application for Reservation of Limited Liability Company Name – Online submission fee: $22.50, postal submission fee: $25
- Articles of Organization – Online submission fee: $45, postal submission fee: $50
Registration Procedure
In Arkansas, an LLC is established by submitting Articles of Organization to the Arkansas Secretary of State.
Additional Legal Obligations
- Annual State Taxes: LLCs are obligated to remit a minimum of $150 tax annually
- Annual Franchise Tax Report: Due each year by May 1
- Business Licenses: Mandatory for specific business categories
- Arkansas DFA Registration: Compulsory for certain business types
