Follow our free guide to form an LLC in Arkansas:

To make the LLC filing process easier, check out our comprehensive guide about forming an LLC in Arkansas.

Pros and Cons of Forming an LLC in Arkansas

arkansas llc

Pros

Growing Economy
Arkansas’s economy has been steadily increasing as the state closed 2017 with a GDP at almost $125 billion. Six Fortune 500 corporations, including global magnate Wal-Mart, call Arkansas home. Additionally, the state is among the top 25 best states in the nation for business.  

Low Cost of Living
The cost of living in Arkansas is well below the national average, by almost 20%. The median price for a home in Arkansas is only $120,000, compared to the national median price of $215,000.

Privacy for Owners
Arkansas does not require all of the names of members/manager of an LLC to be included in the Articles of Organization. In fact, an organizer (the party who prepares and files the paperwork) is able to submit the formation paperwork in place of the members.

Cons

High Poverty Rate
Arkansas currently has one of the highest poverty rates in the nation. With 17% of the state’s residents living below the poverty level, there is much less opportunity for businesses to gain new customers.

High Crime Rate
The crime rate in Arkansas is almost 50% higher than the national average, especially in areas of larceny and property crime. Little Rock is considered one of the more dangerous cities in the nation.

Cost of Doing Business

  • $50 Filing Fee
  • $150 Franchise Tax / Annual Report (Filed Together)

Phase One: Starting Your Arkansas LLC

Forming a new LLC in Arkansas may seem like a difficult task, but the process is not as hard as you think, especially when you have the right kind of help.

Here are the steps needed to start your Arkansas LLC:

Step 1: Name Your Arkansas LLC

Picking a business name is an important part of forming your Arkansas LLC. Before you settle on a specific company name, there are a few guidelines set by the state and federal government  to keep in mind:

Tip: Use a free business name search tool to ensure your company’s desired name is available. If the name is unavailable, try a free business name generator to help ideate alternative names.

Business Name Guidelines

  • The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C
  • Your business name cannot be intentionally misleading to consumers
  • The name of your new LLC must not be similar to another organization’s name/trademark

Restrictions
A few restrictions do exist regarding the name of your LLC, depending on the state where you are starting your business.

A few examples include:

  • “Lottery” and “Bank” are ineligible for use (any state)
  • Terms that represent educational or Veterans’ organizations are restricted
  • Terms related to the Armed Forces or civil servants (police, EMT, fire)

URL Availability
Create an online presence for your LLC by creating a website. You can easily check the availability of your domain names at a variety of online web services sites.

Step 2: Establish Ownership

The owners of an LLC are called either members and managers. Depending on the management structure of the LLC, all LLCs will have members, but not every LLC will have managers.

LLCs generally have two management structures:

  • Member-managed (ownership of the business is divided among the members and all parties receive portions of the profits)
  • Manager-managed (the appointed manager is the main operator and the members are passive investors who are not actively involved in the daily business operations) 

After you have selected a name for your business, you then need to choose a management structure and designate the members of the LLC. The rules concerning LLC ownership in Arkansas include:

Required Number of Members
Arkansas LLCs must have at least one member or manager in order to form a business.

Member Disclosure Requirements
LLC members not disclosed in the filing paperwork. An organizer/authorized representative may sign and file the Articles of Organization in lieu of members.

Age Restrictions
LLC members in Arkansas may be of any age. An organizer must be at least 18 years old.

Residence Restrictions
There are no residency restrictions imposed on LLC members in Arkansas.

Step 2: Establish Ownership

The owners of an LLC are not called owners — they are considered either members or managers. The difference depends on the management structure of the business.

LLCs generally have two management structures:

  • Member-managed (ownership of business is divided among the members and all parties receive portions of the profits)
  • Manager-managed (the appointed manager is the main operator and the members are passive investors who are not actively involved in the daily business operations) 

After you have selected a name for your business, you then need to choose a management structure and designate the members of the LLC. The rules concerning LLC ownership in Arkansas include:

Required Number of Members
Arkansas LLCs must have at least one member or manager in order to form a business.

Member Disclosure Requirements
LLC members not disclosed in the filing paperwork. An organizer/authorized representative may sign and file the Articles of Organization in lieu of members.

Age Restrictions
LLC members in Arkansas may be of any age. An organizer must be at least 18 years old.

Residence Restrictions
There are no residency restrictions imposed on LLC members in Arkansas.

Step 3: Find a Registered Agent in Arkansas

Arkansas LLCs are required to select and appoint a registered agent and submit the agent’s contact information (must be a physical address/not P.O. box) to the state. This person/office is required to operate during standard business hours and act as the state’s point of contact with the business.

What is a registered agent?
A registered agent is a person or business who is authorized to accept official government notices (including the Secretary of State) and service of process notices on behalf of the LLC.

Why do you need a registered agent?
Arkansas state law requires all businesses to have a registered agent so that the Secretary of State’s office has a consistent contact person for businesses. This position is definitely beneficial for LLCs that do not have a physical address.

Who can be a registered agent in Arkansas?
The requirements to be a registered agent are as follows:

  • A resident with a physical address in Arkansas
  • An LLC or corporation that is licensed to conduct business in Arkansas

Please Note: It is also possible for you to be your own registered agent as long as you use a physical address.

Why you may not want to be your own registered agent
Because the registered agent’s name and address are a matter of public record, LLC business owners who choose to be their own registered agent risk compromising their personal information.

Tip: Avoid the hassles and choose Swyft Filings to fill the registered agent needs for small businesses in Arkansas. Find more information here.

Step 4: File the Articles of Organization

Filing the Articles of Organization is the most important step in officially forming an LLC in Arkansas because it allows your business to be legally recognized by the Secretary of State.

What is the Articles of Organization?
The Articles of Organization is a legally binding document that is filed with the state government to officially and legally form your LLC

Why do I need the Articles of Organization?
Your LLC business in Arkansas will not be legally recognized by the Secretary of State without filing this document. Consider the Articles of Organization as part of your LLC’s foundation.

What is the cost of filing the Articles of Organization?
The filing fee for Arkansas is $50.

What information is included in the Articles of Organization?
This vital document includes the following:

  • The name and address of the LLC
  • The name of the organizer filing the paperwork
  • The name and location of the registered agent
  • The chosen LLC management structure
  • The duration of the LLC

Additional Arkansas Filing Requirements - Professional Service Businesses

The state of Arkansas allows professional service businesses to form a specific type of LLC known as a Professional Limited Liability Company (PLLC).

The following professions generally form a PLLC:

  • Accountants
  • Attorneys
  • Physicians and Dentists
  • Professional Counselors and Psychologists
  • Architects and Engineers
  • Veterinarians

Please Note: There are specific regulations for medical professionals seeking to form a PLLC.

A few points to consider:

  • All members of the PLLC must be licensed in the profession of the business.
  • The PLLC is only allowed to provide services for which the business was formed.
  • The members are still subject to whichever licensing boards govern the PLLC’s profession.

Step 5: Create an LLC Operating Agreement

It is not a requirement to have an Operating Agreement for an Arkansas LLC; however,  this document is still considered necessary for any successful business.  

What is an LLC Operating Agreement?
The LLC Operating Agreement is a legal document that defines the details involving the operation of the business and the rights and responsibilities of each person involved in the business.  

Why do I need an LLC Operating Agreement?
The LLC Operating Agreement adds stability and structure to the business by stating the roles of the members and providing direction for daily operations. The agreement also reduces future disputes among the members.

Do I need to file the LLC Operating Agreement?
You do not need to file the Operating Agreement with the state; it is for the benefit of your LLC and remains in-house.

What goes into an LLC Operating Agreement?
Most Operating Agreements will include the following the information:

  • List of the members/managers and their roles
  • Designation of authority in the LLC
  • Initial capital contributions of the members
  • Voting designations and percentages of the members
  • Member transfer/addition rules and restrictions
  • Distribution of profits
  • Meeting schedule

Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.

Step 6: Obtain an EIN

Arkansas requires an EIN for any business that has/will have employees. Additionally, most banks and financial institutions require the EIN in order to open any accounts for the business.

What is an EIN?
The EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS). It identifies your business with the government much like a personal Social Security number.

What does EIN stand for?
EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.

Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:

  • Any business with employees (even if owned by one person)
  • Any business with more than one member
  • A partnership (LLC or C-corp)

Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.

Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:

  • To hire employees
  • To open a bank account in the U.S.
  • To file your company’s taxes
  • To pay independent contractors

In short, if you make money through your business and it has employees, you must have an EIN.

Is the EIN publicly listed?
The EIN for your LLC will be part of public record.

Can I use my Social Security Number as the EIN?
You are allowed to use your social security number; however, your EIN is part of public record.

Swyft Filings offers EIN services for small businesses in Arkansas. Find more information here.

Phase Two: Maintaining Your Arkansas LLC

Once you are done with the initial phase of setting up your Arkansas LLC, it is time to move on to the next phase that involves getting your LLC ready for business. The next few steps are:

Step 1: Register for Arkansas State Taxes

All businesses in Arkansas (corporations and LLCs) are required to pay an annual franchise tax that is also connected to the annual report - the total due each year is $150.

Corporate Tax Information
The table below shows the corporate tax rates for Arkansas:


Additional Tax Information
Other taxes your LLC may need to pay:

  • Sales and Use Tax at 6.5%
  • Employee Withholding Tax
  • Unemployment Tax

Step 2: Obtain Business Licenses and Permits

The business licenses and permits required in Arkansas vary on a number of variables:

  • Location (city and county)
  • Type of Business
  • Industry

Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.

Step 3: File an Annual Report

LLCs formed in Arkansas are required to file an annual report with the Department of State. The purpose of the annual report is to keep your business’s information and status updated with the state.

What is an annual report?
An annual report, which is also called a periodic report, is a legal form that is filed with the Secretary of State on a periodic basis that is designed to keep your business’s information current with the state.

What kind of information is in the annual report?
The information requested in the annual report is similar to what is in the Articles of Organization

  • The name and address of the business
  • The name and address of the registered agent
  • The business’s EIN

Is the annual report part of public record?
The annual report filed on behalf of your LLC is a matter of public record.

Please Note: The annual report for Arkansas is filed in conjunction with the franchise taxes. 

Fee: Included in franchise tax payment
Due Date: May 1st
Frequency: Every year
Implications of Late Filings: $25 Late Fee

Swyft Filings helps you stay compliant by providing stress-free solutions. File your annual report with us today.

Step 4: Obtain a Certificate of Good Standing

After your Arkansas LLC has been formed and is ready for business, there is still one last step—getting a Certificate of Good Standing.

What is a Certificate of Good Standing?
The Certificate of Good Standing is an official document from the government agency that confirms your entity has been properly filed and is still in compliance with all state regulations.

Who issues the Certificate of Good Standing?
The Certificate of Good Standing is generally issued by the Secretary of State.

When can I request a Certificate of Good Standing for my business?
You can request a Certificate of Good Standing through the Secretary of State after your LLC is formed.

Why do I need a Certificate of Good Standing?
You may need to prove that your business is fully compliant with the state and has a Certificate of Good Standing gives your LLC that backing. Additionally, many banks and businesses will require this document as part of the due diligence process.

Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not expire/does not need to be renewed.

Swyft Filings can create a Certificate of Good Standing for your Arkansas LLC. Click here for more information.


Additional Arkansas Resources