Think about your LLC a year from now: raking in profits and taking Arkansas by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Arkansas.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Arkansas startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Arkansas
Optional: LLC Name Reservation Fee
- $22.50 online and $25 on paper
Required: Articles of Organization Fee
- $45 online and $50 on paper
Overall Arkansas LLC Formation Costs
LLC Name Reservation Fee
Reserving a business name isn’t required in Arkansas, but if you have a great name and aren’t ready to start your LLC, you might take advantage of this service. When you reserve a business name in Arkansas, you’ll receive 120 days of exclusive name rights, and it will cost you $22.50 (if you file online) or $25 (if you file a hard copy). At the end of these 120 days, you can renew your reservation, but you’ll have to pay another fee.
Articles of Organization Fee
This is the big one, the most important form that you’ll file to start your Arkansas LLC. The Articles of Organization is what makes your business official and allows you to begin transacting business in the state. You can’t do much without it. In some states, the Articles of Organization is a pricey filing, but in Arkansas, it will only set you back $45 for an online submission ($50 for a paper filing). What’s nice, is that you only need to file the Articles of Organization once per business that you start. As long as your form is accepted, you won’t have to think about paying this fee again.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Arkansas business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. Your business lawyer is an investment, so it’s important to find the one that’s right for you and your LLC. Sites like Avvo are extremely helpful, providing databases of Arkansas business attorneys, so you get their details, specialties, rates, and contact info, all in one place.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Arkansas. Instead of the Articles of Organization, foreign LLCs are required to file a “Certificate of Registration.” This is the key to obtaining authorization to do business in the state.
All foreign business entities are required to foreign qualify in Arkansas, or they could incur some pretty severe penalties. Filing a Certificate of Registration is quite a bit more expensive than filing the Articles of Organization, though, $270 to file online and $300 for a hard copy. But like the Articles of Organization, as long as your form is accepted, you won’t need to pay this fee again.
LLC Annual Fees
Registering your domestic or foreign LLC comes with a one-time fee, but there are also recurring annual fees that keep your business in good standing. Some states use annual reports to maintain updated business information, and some states require yearly franchise tax payments. In Arkansas, these two are rolled into one filing. Arkansas Annual Reports are part of the Franchise Tax payment process. See below for details.
Every Arkansas LLC is required to file a Franchise Tax/Annual Report by May 1 of each new year. You can file and pay either online or on a paper form (find both here). Each of these methods costs $150.
LLCs are typically classified as “pass-through entities,” which means that the company itself doesn’t need to file a tax return with the state; its members just file their own income taxes. So, other than the Franchise Tax, your LLC won’t have annual tax payments. However, you can choose to have your LLC taxed like a corporation. In this case, your business would need to file its own tax return and pay a corporate income tax, which can be anywhere between 4-10%.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Failing to properly register your business, maintain a registered agent, or pay annual taxes can cause your business to fall out of good standing with the state. The Franchise Tax specifically has a $25 late filing fee, but this is the least severe of the potential penalties for getting behind on your paperwork. An LLC that’s fallen out of good standing with the state cannot request a “Certificate of Good Standing,” which is necessary for certain business transactions, loan applications, professional license renewal, and foreign qualification in other states (among other things).
Further, if your business doesn’t earn back its good standing by filing delinquent forms and fees, it risks dissolution by the state. Staying on top of your paperwork and payments will save you from penalties and headaches in the future.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Arkansas.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like franchise taxes – so your business doesn’t fall out of good standing.