Forming an LLC in Arkansas will help protect your personal assets from lawsuits and judgments against your business. An LLC is a legal structure that separates your business and personal assets. By not having your business in a separate legal structure, you can be held personally liable for certain debts and lawsuits incurred by the company. Forming an Arkansas Limited Liability Company does not require an attorney and you can save a lot of money if you do it yourself with the five simple steps below.
Before getting into the five steps here are a few things to know about Arkansas LLCs.
Arkansas requires most businesses to obtain a license and pay a fee if operating in the state. Please check with the state to make sure your business is complying with the license requirements for your particular profession.
How Much Does It Cost to Get an LLC In Arkansas?
Arkansas has one of the lowest filing fees of any state (tied with Kentucky) for $50.
Arkansas Annual Report and Annual Fees
Arkansas requires an annual reports from domestic LLCs, regardless of business activity, in addition to paying the annual franchise tax with the Arkansas Department of Finance and Administration. This will cost $150 annually.
- Minimum Number – one or more
- Members/Managers- at least one is required to be listed in the Articles of Organization
- Residence Requirements – none specified
- Age Requirements – none specified
In addition to forming your Arkansas LLC, you will need to check for licenses and permits. StartingYourBusiness.com has a list of local, state and federal permits for businesses in addition to free business counseling.
Steps to Forming an Arkansas LLC
Step 1. Name Requirements
Your corporate name must end with the words Limited Liability Company or an abbreviation of these words (“LLC,” “L.L.C.,” “Limited,” “LTD.,” “LTD”.). Check out our article on naming your LLC for all of the requirements that you must follow when naming an LLC.
Companies which perform Professional Service MUST additionally contain the words “Professional Limited Liability Company,” “Professional Limited Company,” or the abbreviations “P.L.L.C.,” “P.L.C.,” “PLLC,” or “PLC” and may not contain the name of a person who is not a member except that of a deceased member. The word “Limited” may be abbreviated as “Ltd.” and the word “Company” may be abbreviated as “Co.”
Arkansas allows the reservation of an LLC name for a filing fee of $25.00.
Now that you have the perfect name, you want to be sure nobody else is using it as each state requires a unique name per LLC or Corporation. To check if your name is being used, visit our page with links to each state office to do a free Arkansas LLC name search.
Arkansas also has a telephone number to call and check to see if your name is available. Their number is 888-233-0325
Step 2. Choose a Registered Agent
The registered agent must have a physical presence in Arkansas but may be an individual resident, domestic or foreign corporation authorized to transact business in Arkansas. The registered agent must also have a physical address in Arkansas and a Post Office Box is not acceptable. If the registered office includes a suite number, it must be included in the registered office address.
Provided you as the business owner have a physical presence in Arkansas, you can be the registered agent however, a registered agent in Arkansas must be available during normal business hours between 9am and 5pm to accept legal correspondence. If your LLC is served and the state is unsuccessful in reaching your agent, the LLC may be involuntary dissolved.
Check out our article on LLC Registered Agents for more details.
Step 3. File the Articles of Organization
This is the most important step and many people believe that you need an attorney to file. While we don’t discourage having an attorney, filing for an LLC can be done by most people, but you can save considerable money over an attorney and make sure everything is filed correctly by using a formation service such as LegalZoom.
Step 4. Create an Operating Agreement
An operating agreement is not required in Arkansas but is typically a good idea, especially for an LLC owned by multiple people. The primary function of the operating agreement is to govern the relationship between the owners of the business, but also outlines who makes what decisions, how profits or losses are distributed and the operating procedures of the LLC.
Step 5. Get an EIN
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number (FEIN), is used to identify a business entity. It is essentially a social security number for the company.
In addition to the EIN being an identifying number for the LLC it serves a few other purposes such as:
- Opening a business bank account
- Federal and State tax purposes
- Conduit to pass payroll taxes for employees paid by the company
This link will take you to the IRS website to get an EIN for your LLC. Less than five minutes and you will have your number free of charge. Wait until your LLC is approved and filed before applying for your EIN.
Something to consider with a new LLC is that it has no credit history associated with it and as such may make it a more difficult to acquire business funding or vendor credit. Depending on the industry, you may want to look into building your LLC’s business credit soon after filing to begin generating a credit history. Dun & Bradstreet offers a lot of information about improving business credit.
Don't want to go it alone but don't want the expense of an attorney? Another alternative is to use an LLC formation service that will do the formation at a low cost. Take a look at our comparison page of popular LLC formation services.
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