ZenBusiness (which has formed more than 400,000 businesses) has an inviting offer for LLC formations that is among the best options nationwide and in Arkansas. We pride ourselves in offering the most bang for your buck in the industry.
We offer LLC formations for free (only pay your state fee). In addition, we receive spectacular feedback from our clients, with more than 10,000 reviews available online and nearly universal acclaim from our customers. Get this discount!
Furthermore, ZenBusiness is a public benefit corporation, which indicates that we’re focused on more than simply maximizing our profits. We have a partnership with Kiva.org to help lift people out of poverty through financial lending, and ZenBusiness also loans money to help women- and minority-owned businesses get off the ground.
It’s tough to top what ZenBusiness has to offer, no matter what state you’re starting a business in.
LegalZoom is the biggest name in the LLC formation service industry. They’ve been a prominent player in this market for years, and they advertise more than most of their competitors combined.
They also serve a very high volume of customers, so there’s no denying that LegalZoom is a popular service. In addition, LegalZoom has thousands of mostly positive customer reviews available online.
However, their pricing is acceptable but uninspiring. Their LLC formation packages are threadbare and lacking value compared to many of their competitors.
If you prioritize using the company with the largest volume of customers or the biggest brand power, LegalZoom is certainly worth a look.
Are you interested in receiving personalized customer support? If so, give Northwest Registered Agent a look. Northwest provides all of its clients with support from its Corporate Guides.
These highly trained representatives walk you through each step of the formation process, and you can contact your Guide at any time to ask questions or get advice.
Northwest’s pricing starts at $225, and that rate includes 12 months of their registered agent service.
While their competitors typically only scan the government documents they’re legally required to scan, Northwest scans all documents they receive on your behalf.
They provide solid overall value, and they also receive strong reviews from their customers, albeit in a smaller volume of feedback than ZenBusiness has to offer. If you’re looking for personalized service, Northwest is a good AR LLC service.
Who doesn’t like getting things for free? Along with ZenBusiness, IncFile is one of the only companies we’ve ever heard of that actually offers to form your Arkansas LLC at absolutely no charge, as long as you pay your own state fee.
This is a bargain, and it gets even better when you realize that IncFile is far from a barebones service. With IncFile, that free formation package we just discussed actually comes with a free year of registered agent service.
In addition, they have a positive reputation for customer feedback, as they have thousands upon thousands of reviews available online, and nearly all of them are perfect five-star scores.
The only real drawback of IncFile is that their customer support team can sometimes take a bit to get back to you. Still, it’s hard to complain about a company that offers to form your LLC for free while still throwing in a full year of registered agent service.
Arkansas LLC Fast Facts
- LLC Formation Speed: Within two business days
- Cost to File an AR LLC: $45, plus the service’s fee if you use one
- How to File Your Articles of Organization: Online or by mail ($5 fee for mail-in filings)
- Annual Reports: Accompanies the annual franchise tax, which has a minimum $150 fee; due by May 1 each year
- State General Business License: Not required (but often required on the county/city level), but industry licenses may apply
- PLLCs: Required for all businesses that offer professional services
What Is an Arkansas LLC?
LLCs are formal legal entities that are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes.
An LLC may also elect to be taxed like a corporation, although this is not a very common option.
There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk.
While Arkansas does not legally require LLCs to create an operating agreement, it’s still strongly recommended. This document can help clear up any disagreements between your owners, and it’s also just generally convenient to have a roadmap of your LLC’s operational aspects.
Arkansas is one of the most affordable states for LLC formations, as you’ll only pay $45 for an online filing or $50 on paper. You can pay by check, money order, or credit/debit card. The state typically processes LLC formations within two days of receiving your documents.
The ongoing LLC maintenance requirements in Arkansas include the Annual LLC Franchise Tax Report. You need to file it by May 1 of each year, and there is a filing fee of $150.
The Total Cost of Forming and Maintaining an LLC in Arkansas
In addition to the costs of a business formation service or hiring an attorney (which are optional, as we’ve discussed), there are quite a few other required and optional expenses when forming and maintaining an Arkansas business. You cannot form an LLC in Arkansas without filing the Certificate of Organization, the document that officially registers your business in the state. This document costs $45 to file electronically and $50 to file by mail.
Your LLC will also need to file the Annual Franchise Tax Report each year. There is a flat filing fee of $150. This form is pretty simple, but it keeps the state up-to-date about some vital business information.
Last but not least, there are business taxes to consider. Like most states, Arkansas has income taxes. You’ll also have to pay federal taxes, along with several others.
For instance, if you have employees, you’ll pay unemployment insurance tax. If you sell goods or services, you’ll pay sales and use tax. Depending on the nature of your business, there could be other taxes required, so check with the Arkansas Department of Revenue to make sure.
Other than that, the other potential expenses only apply to certain businesses. These include things like professional or industry-specific business licenses and business insurance.
Pros and Cons of Creating a Limited Liability Company
An LLC is one of the most popular entity types nationwide. But it isn’t the right type for everyone.
Only you can pick which entity type best fits you and your business; after all, you understand your business idea better than anyone. You have a clear vision for your products and services, both present and future.
To truly determine whether an LLC is right for you, it’s helpful to consider the advantages and disadvantages of LLCs.
- Easier to form and maintain than a corporation
- Personal asset protection
- Flexible taxation structure; can pay as a partnership or a corporation
- Business name is protected for exclusive use within state boundaries
- No authority to issue stock, so opportunities to raise capital are limited
- Fees are higher than partnerships or sole proprietorships
- Requires more paperwork than some entrepreneurs are comfortable with
Should You Form an Arkansas LLC or Corporation?
There are some common aspects of the LLC and the corporation, starting with the personal asset protection they both provide. Also known as limited liability, this personal asset protection ensures that if your business is sued, only the business assets are at risk. Meanwhile, your personal assets — like your house, car, personal bank accounts, investments, etc. — are protected by your LLC or corporation’s business structure.
In addition, LLCs and corporations both provide their owners with business name exclusivity. If you own and operate a sole proprietorship or general partnership, you will not have exclusive rights to your business name. Instead, if another company decides to use your name as its own, you won’t be able to stop them. In fact, they could even register your business name and gain exclusive rights to it, forcing you to come up with a new one.
Advantages of the LLC
In general, an LLC is quicker and easier to form than a corporation. LLCs usually need to provide less information for their formation documents than corporations do, and there are fewer steps in the process as well. For instance, LLCs don’t need to draft corporate bylaws, name officers or board members, hold initial board meetings, or issue stock. On the other hand, corporations need to do all of these things and more.
The LLC is also a less rigid business structure that allows its owners greater flexibility. The business structure of a corporation is inflexible, with many regulations dictating how the business should look and function. Meanwhile, LLCs have options for business management structure and ownership responsibilities that corporations simply don’t have.
Another even more valuable option LLCs have is that they can choose how they want to be taxed. Most LLCs are taxed as pass-through entities, which means the business itself does not pay taxes, but the profits are passed through the LLC itself to its owners, who pay taxes on this money on their personal returns. However, LLCs can also opt to be taxed like corporations (either as a C corporation or an S corporation), giving them more options for taxation than a corporation has.
Advantages of the corporation
Corporations have some advantages too, like the ability to sell stock. It’s quite difficult for an LLC to attract outside investments because it cannot issue stock. The vast majority of investors prefer stock as their investment medium, and it’s also very rare to see venture capitalists investing in LLCs. For these reasons, the corporation is a much better option for businesses looking to attract investments.
In addition, the corporation has been around for hundreds of years, while the LLC is a newer addition to the American business landscape. This means that the corporation has more established legalities and also that it’s easier to expand into other states because the corporation’s structure is essentially the same no matter where you form it.
How to Set Up an Arkansas LLC on Your Own
Technically speaking, you don’t have to use an LLC formation service like ZenBusiness or LegalZoom. These services are incredibly helpful, but you can save money by completing the process yourself.
You can read our complete guide to DIY an LLC setup in Arkansas, but here’s a quick look at the process:
Choose a business name
Every LLC in Arkansas needs a name that’s memorable and gives potential clients a good idea of what goods or services are available. The name also needs to be unique — both for legal reasons and so your business stands out from the competition.
Appoint an AR registered agent
As we’ve mentioned in this guide, every LLC needs an agent who can accept service of process on your behalf. In all states, you can act as your own registered agent as long as you have a physical address in the state. That said, we generally recommend that you appoint someone else (like an online service) to act as your agent.
File the Articles of Organization
This document, once filled out and filed, officially forms your business in the state of Arkansas. You’ll need to provide some important information, including your contact information, your business address, signatures for your LLC’s members, and more. Arkansas has a $45 filing fee.
Setting up the LLC is as easy as 1-2-3; it’s the maintenance requirements that are a bit more complicated:
Register for and pay taxes
If you have employees, you’ll need to get an Employer Identification Number from the IRS. Then there are state-specific taxes, too. Arkansas charges graduated income taxes; the individual rates range between 5% and 6.9%, and corporate rates fall between 1% and 6.5%. Beyond that, the biggest tax burden is the Franchise Tax. You will also need to account for sales taxes (6.5%) and other miscellaneous taxes. More information can be found at the Arkansas Department of Finance and Administration.
Get licenses and permits
There’s no general state business license in Arkansas, but many local cities and counties require them. You may also need to apply for industry licenses; you can find a full list of professional licenses at the Arkansas Division of Workforce Services.
Create an operating agreement
Even single-member LLCs should create a “master document” that sets out how the business will operate, both now and in the future.
File your annual report
The Arkansas annual report actually goes hand-in-hand with the annual franchise tax, so you’ll file with the Department of Finance and Administration, not the Secretary of State. There is a minimum tax of $150 annually.
Obtain business insurance
Every business with employees needs to maintain workers’ compensation insurance and a commercial vehicle policy for company-owned vehicles. You may also want to get a general business liability policy, too.
Get a business bank account
You should sign up for a business bank account so you can write checks and make purchases in the name of the business instead of pulling from your personal accounts (a legal no-no).
This is just the tip of the iceberg, though. For more detailed guidance, we recommend contacting an attorney or checking out the full Arkansas LLC Formation Guide.
Hiring an Attorney to Form Your Arkansas LLC
If your business is especially complicated, or you simply prefer the peace of mind you get from having a qualified business attorney forming your entity, you could hire a lawyer instead of using a formation service. Hiring an attorney will definitely be far more expensive than using an online service, but you will receive the level of expertise and experience you can only get from a lawyer.
There’s no denying that there is a wide range of business attorneys serving Arkansas, so we took a look at the best options for your business. To find the best of the best, we consulted Avvo’s list of the top-rated lawyers in Arkansas. Here are our top four choices in the state:
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Frequently Asked Questions
Where Can I Get More Information About Forming LLCs in Arkansas?
We invite you to take a look at our comprehensive guide to forming a limited liability company in Arkansas. This article walks you through the LLC formation process in this state step by step, ensuring that you don’t miss any crucial elements.
How Can I Search Arkansas’ Business Name Database?
One of the most important steps in forming an Arkansas LLC is choosing a business name. Once you come up with ideas for your name, you should search through the Secretary of State’s business entity database to make sure your desired name is available. For more information on conducting a business name search in Arkansas, check out our full article on the topic.
Where Can I Find the Arkansas Certificate of Organization?
You can find online and hard copy options of the Arkansas Certificate of Organization on the Secretary of State’s website.
What Are Arkansas’ Ongoing LLC Maintenance Requirements?
All LLCs operating in the state of Arkansas are required to submit an Annual LLC Franchise Tax Report to the Secretary of State. It’s due by May 1 each year, and it costs $150.
Where Can I Learn More About the Arkansas LLC Licensing and Permitting Requirements?
Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Arkansas state law. Unfortunately, the state provides no official online resources to provide more info about business licensing. However, we did find some helpful info in the Arkansas Small Business and Technology Development Center’s “License, Permit, & Tax Requirements for Arkansas Small Businesses” document.
How Quickly Does Arkansas Process LLC Formations?
Arkansas processes most business document filings within two business days.
Which Company Provides the Best Arkansas Registered Agent Service?
If you want more details about what these companies can offer in this state, or you’d like to take a look at some other options, check out our complete guide to Arkansas registered agents.
How Can I Dissolve My Arkansas LLC?
Unfortunately, not all businesses last forever. If the time comes when you need to close your LLC’s doors, you’ll need to do so in a manner consistent with the state’s regulations. That’s why we wrote our guide to Arkansas LLC dissolutions, so you can complete the process in a compliant manner.
What if I Need to Expand a Business From Another State to Arkansas?
If your LLC already exists in another state, you don’t actually need to “form” it in Arkansas. Instead, you’ll need to foreign qualify the business in this state. This process is somewhat similar to LLC formation, but there are some crucial differences as well. Take a look at our guide to foreign qualifications in Arkansas for more information.
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