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.
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.
✔ Start Your LLC For Free
As a business owner, you have so much to think about. Let an LLC service take care of the formation paperwork so you can sleep easy knowing everything is totally taken care of.
ZenBusiness has formed over 300,000 businesses, is reliable, fast and free when you use our special discount. Not to mention $79 less than LegalZoom!
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 had copy). At the end of these 120 days, you can renew your reservation, but you’ll have to pay another fee.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform an Arkansas business name search to make sure the name you want is available.
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.
The Articles of Organization requires some basic information about yourself and your business, including your LLC’s official business name, your LLC’s principal business address, your registered agent’s name and address, an indication of whether your business is managed by its members or by a manager, the name and title of at least one member, the date, your name, and your signature.
Before we move on, we’ll mention that if you’re forming an Arkansas professional LLC, you can use the same Articles of Organization document used for a standard LLC formation.
Certain types of businesses require professional licensure before they can begin conducting business in the state. Plus, cities all have their own licensing laws, so you’ll need to check with your LLC’s hometown to determine which licenses they require.
What are some of the most commonly required business licenses for Arkansas LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in Arkansas 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 company. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness or IncFile) offer basic LLC formation services 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 an Arkansas 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, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
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 $500-2,000.
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.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Arkansas. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
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.
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.
The information required to file your annual franchise tax report includes your LLC’s official business name, your LLC’s address, your contact info, your federal tax ID number (EIN), your registered agent’s name and address, an indication that your LLC is managed by its members or by a manager, the names of your LLC members, the name of your tax preparer, the date, your name, and your signature.
For more information about Arkansas annual reports, consult our full guide on this topic.
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 1-6.2%. Otherwise, you’ll simply need to pay Arkansas’ personal income tax rate of 1-6.9%.
What if I Don’t Pay?
Want to form an LLC for free? ZenBusiness will file all LLC formation paperwork for $0 + state fee (normally $49 + state fee). No catch, just savings.
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.
Key Steps for Starting an Arkansas LLC
- The first step to forming an Arkansas LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Arkansas, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $45 or $50 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Arkansas LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the Arkansas Department of Finance and Administration, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Arkansas!
Key Steps for Maintaining an Arkansas LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual franchise tax reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Arkansas.
What are the state business tax rates in Arkansas?
Every Arkansas business must pay a $150 annual franchise tax to operate in compliance with state law. Beyond that, LLCs taxed as corporations pay the state’s 1-6.2% corporate income tax rate, while LLCs taxed as partnerships or sole proprietorships pay a 1-6.9% personal income tax.
How quickly does Arkansas process LLC formations?
Arkansas processes most business document filings within two business days.
How many small businesses are there in Arkansas today?
The state of Arkansas is home to around 250,000 small businesses. Entrepreneurs of all backgrounds and business types find that Arkansas is a great place to own and operate a small business.
What are the top small business resources and websites in Arkansas?
The Arkansas district office of the U.S. Small Business Administration is a great place to start. The Arkansas Economic Development Commission is also an excellent resource, while tech-savvy entrepreneurs can likely find plenty of valuable information from the Arkansas Small Business and Technology Development Center.
Should I form my LLC in Arkansas, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.