How to File an LLC in Arkansas

If you’re an entrepreneur in Arkansas, starting an LLC is a popular and effective way to establish a legal business entity. It provides several benefits, including personal asset protection, pass-through taxation, and limited liability. When filing for an Arkansas LLC, it’s crucial to research the specific requirements and regulations that the state requires to ensure compliance.

Before filing for an LLC, you must decide on the business structure you want to establish. Consider the pros and cons of the various structures out there before making a decision.

Key Takeaways:

• An Arkansas LLC provides several benefits, including personal asset protection, pass-through taxation, and limited liability.

• In Arkansas, you can reserve a business name for up to 120 days before filing your Certificate of Organization.

• An LLC is classified as a pass-through entity, signifying that the business itself does not pay taxes on its earnings.

If you’re ready to start an LLC in Arkansas, this step-by-step guide will help you through the process. We will guide you through all the essential information, such as necessary paperwork, submission costs, and ongoing adherence obligations. Keep reading to learn more about what an LLC is and the steps you’ll need to follow to ensure compliance and success for your business.

What Is an LLC Formation?

A limited liability company, commonly known as an LLC, is a type of business formation offering its proprietors limited liability protection. Entrepreneurs seeking to establish their own businesses can make a wise decision by opting for an LLC due to its liability protection, tax versatility, and simplified formation process.

One of the main reasons small business owners in Arkansas choose to form an LLC is that it separates their personal assets from the business’s liabilities. In case the LLC faces a lawsuit or incurs debts, this indicates that the owner’s personal assets, such as their house or car, are generally protected.

There are two types of ownership for LLCs— single-member LLCs, where you would act as the sole owner of the company or multi-member LLCs, where you have a group of members acting as owners of the company.

Regarding tax purposes, an LLC in Arkansas can be classified as a disregarded entity, partnership, S Corporation, or C Corporation. This means the LLC can choose how it wants to be taxed for federal income tax purposes.

Step-by-Step Guide to Starting Your Arkansas LLC

Forming an LLC in Arkansas is relatively easy and affordable. You’ll need to pay a filing fee and follow a few simple steps to start. This guide will provide helpful knowledge and tools, regardless of the size of your business.

Step 1: Choose a Business Name for Your LLC

When selecting a name for your Arkansas LLC, it’s crucial to ensure it’s distinct and not presently in use by any other company in the state. Here are some essential guidelines for naming a new LLC in Arkansas:

• The LLC name must include “Limited Liability Company” or an abbreviation, such as “LLC.”

• The name cannot have words that could be confused with a government agency, such as “FBI” or “Treasury.”

• The name cannot imply that the company is involved in a business it’s not authorized to conduct.

• The name must not be deceptively similar to an existing business name in the state of Arkansas.

In Arkansas, you can reserve a business name for up to 120 days before filing the Certificate of Organization. The fee to reserve a name is $22.50 online or $25 to register by mail.[1] If you want to reserve a name, you must provide the name you wish to reserve and your contact information. It is essential to note that reserving a name does not mean that the name is approved or available for use. It simply reserves the name for you for the specified time.

You can check the Arkansas Secretary of State’s online business entity search tool for company name availability. However, remember that the state’s online tool may not always be accurate or up-to-date. You should also perform broader internet and trademark searches to ensure your name is available.

We can assist you with these searches with our free Business Name Search tool.

If you want a separate name from your legal title to use for marketing purposes, you can file for a DBA, a doing business as name, also known as a fictitious name or trade name. By filing this name, you’ll have protection against potential legal issues when using a different name for your business.

Registering a Domain Name for Your Arkansas LLC

If you plan to have a website for your Arkansas business, consider registering a domain name. This is the web address that people will use to find your website. Choosing a domain name that matches your LLC name makes it easy for people to discover you online.

You can register a domain name through a domain registrar such as GoDaddy or Namecheap. Prices for domain names vary but typically range from $10 to $50 annually.

Trademarking Your Arkansas LLC Name

If you want to protect your Arkansas LLC name from being used by others, consider trademarking it. This gives you exclusive rights to use the name for your business and prevents others from using it without your permission.

You can apply with the U.S. Patent and Trademark Office (USPTO) to trademark your Arkansas LLC name. The application fee is $250-$350 per class of goods or services, and the process can take several months to complete.[2] It’s a good idea to consult with an attorney specializing in intellectual property law to ensure you properly file your trademark application and help you navigate the process.

Step 2: Fill Out the Arkansas Certificate of Organization

To legally form an LLC in Arkansas, you must file a Certificate of Organization for Limited Liability Company with the Arkansas Secretary of State. Here is a breakdown of the required information you will need to include on this form:[3]

• LLC name: The name of your LLC must be distinguishable from any other business entity registered in the state of Arkansas. 

• Registered agent: You must provide the name and physical address of your LLC’s registered agent. 

• Business purpose: You must state the purpose for forming your LLC.

• Management structure: You must state whether your LLC will be managed by its members or managers.

• Principal street address: You must provide the address of your LLC’s principal office.

• Organizer information: You must provide the name and address of the person organizing the LLC.

You can obtain a copy of the Certificate of Organization form on the Arkansas Secretary of State’s website. The filing fee for the Certificate of Organization is $45 online or $50 by mail. If filing by mail, you can expect a processing time of approximately 5-7 business days. If you need expedited processing, there is an additional fee of $25.

Step 3: Hire an Arkansas Registered Agent

When starting an LLC in Arkansas, you must have a registered agent. A registered agent is responsible for receiving legal documents and important government notices for your business. This person or entity must have a physical address within the state of Arkansas and be available during regular business hours to receive any service of process communication that may come in.

Our Registered Agent service is trusted by small business professionals in Arkansas and beyond. Our service includes dedicated digital tools, such as an online dashboard, which provides secure and reliable access to your official documents. Additionally, our team is available 24/7 to assist you with any questions or concerns. 

Step 4: Create an LLC Operating Agreement

When forming an LLC in Arkansas, it’s essential to consider creating an Operating Agreement. Although not legally required by the state, having one can provide clarity and structure for your business’s operations.

An Operating Agreement is a written document that outlines the LLC owners and management structure and its members’ roles and responsibilities. It can also establish rules for decision-making, allocation of profits and losses, and other vital aspects of running the business.

You can clarify your structure as either a member-managed LLC, where all LLC owners take part in the everyday operations of your business, or a manager-managed LLC, which hands the daily decisions over to a hired manager.

While creating an Operating Agreement may seem daunting, resources are available to help simplify the process. Swyft Filings offers an Operating Agreement service to ensure your Arkansas LLC has a written agreement outlining your business’s ownership and operating procedures. 

Step 5: File for an Employer Identification Number

If you plan to hire employees or open a business bank account for a credit card, you’ll need an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN is essentially a social security number for your business. It serves as your tax identification number for both federal and state taxes. You can apply for an EIN for free on the IRS website or by mail, fax, or phone.[4] Before applying, you’ll need to have your Arkansas LLC formed and your Certificate of Organization approved by the Secretary of State.

You’ll need to fill out an online application on the IRS website to apply online. The process is relatively straightforward, and you can get your EIN instantly upon completion. If you prefer to apply by mail, you must complete Form SS-4 and mail it to the IRS. This process takes around four weeks.

You’ll also may need to apply for a Seller’s Permit to legally obtain sales tax while conducting business in Arkansas.

Let Us Handle Your LLC Paperwork

As an entrepreneur in Arkansas, you’re likely always on the go. You’re busy networking, researching, and creating the perfect pitch for potential clients. The last thing you want to worry about is the complex paperwork of setting up a business. Using an LLC formation service can take that pressure off to allow you to focus on building your organization.

Our experienced team of professionals understands the ins and outs of Arkansas LLC formation. We’ve got you covered for all steps along the way.

FAQs:

How much does setting up an LLC in Arkansas cost?

You should consider several potential expenses, including state fees, to set up an LLC in Arkansas. Here is a list of some of the ordinary costs you may encounter and their average prices:

• Filing fee for the Certificate of Organization: $50

• Registered Agent fee: $50-$300 per year

• Business license fee: varies depending on location, typically around $100

• Name reservation fee: $25

• Annual franchise tax: $150

• Attorney or accountant fees: vary depending on the complexity of the LLC and the services needed but can range from a few hundred to several thousand dollars

It’s essential to remember that these are just estimates, and the actual cost of setting up an LLC in Arkansas may vary based on various factors. Researching and consulting a professional is always a good idea to ensure you understand all the costs involved.

How is an LLC taxed in Arkansas?

In Arkansas, an LLC is classified as a pass-through entity, signifying that the business itself does not pay taxes on its earnings. Instead, the profits and losses get passed on to individual members, who report them on their personal tax returns.

If the LLC has more than one member, it may be treated as a partnership for federal tax purposes. In this case, the LLC must file an informational tax return (Form 1065) with the IRS, but again, the profits and losses will pass through to the individual members.

As with any tax-related matters, it’s recommended that LLC members consult with a tax professional to ensure they meet all requirements and take advantage of any available deductions.

What are the benefits of an Arkansas LLC?

An Arkansas LLC offers several benefits to its owners, including:

• Limited liability protection: An LLC structure provides liability protection to its owners, separating personal assets from business liabilities.

• Tax flexibility: LLCs have the option to choose their tax classification as either a sole proprietorship, partnership, S corporation, or C corporation, depending on the needs of the business.

• Minimal formalities: LLCs in Arkansas have fewer formalities than other business entities, such as corporations, allowing for more flexibility and ease of operation.

• Flexibility in ownership: LLCs have flexibility in ownership, including multiple members or other entities, such as corporations or trusts.

• Business name protection: Once registered, an Arkansas LLC’s name is protected from use by other businesses in the state, providing exclusivity to the business.

• Ease of transfer: LLCs can be transferred or sold to another party without requiring the dissolution of the business, making it easier to transition ownership.

How do you dissolve an LLC in Arkansas?

To dissolve an LLC in Arkansas, you must follow specific steps:[5]

1. Draft and File the Articles of Dissolution: You need to draft and file the Articles of Dissolution with the Arkansas Secretary of State’s office. The filing fee for the Articles of Dissolution is $50.

2. Obtain Tax Clearance: You must obtain tax clearance from the Arkansas Department of Finance and Administration and ensure you fully pay all outstanding taxes, fees, and penalties your LLC owes.

3. Notify Creditors and Business Associates: You must notify all of your LLC’s creditors, including business associates, vendors, suppliers, and lenders, that you are dissolving the LLC. You must also pay off any outstanding debts and obligations.

4. Distribute Remaining Assets: After you’ve paid off all of the LLC’s debts and obligations, you must distribute any remaining assets among the LLC’s members according to the terms of your LLC Operating Agreement.

5. Close All Business Accounts: You must close all business bank accounts and cancel any business licenses, permits, or registrations your LLC may have.

It’s important to note that dissolving an LLC can be a complex process, and it’s highly recommended that you seek the advice of an attorney or tax professional to ensure that you comply with all state and federal regulations.

Bibliography:

1. Arkansas Secretary of State. (n.d.). Limited Liability Company Forms and Fees. https://www.sos.arkansas.gov/business-commercial-services-bcs/forms-fees/llc. Accessed April 17, 2024.

2. United States Patent and Trademark Office. (n.d.). Overview of Trademark Fees. https://www.uspto.gov/trademarks/fees-payment-information/overview-trademark-fees. Accessed April 17, 2024.

3. Arkansas Secretary of State. (n.d.). Articles of Organization for a Limited Liability Company. https://www.sos.arkansas.gov/uploads/LL-01.pdf. Accessed April 17, 2024.

4. Internal Revenue Service. (n.d.). Apply for an Employer Identification Number (EIN) Online. https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. Accessed April 17, 2024.

5. Arkansas Secretary of State. (n.d.). Name Reservation. https://www.sos.arkansas.gov/uploads/bcs/DN-10.pdf. Accessed April 17, 2024.