With Arkansas repealing its LLC laws and becoming the 20th state to adopt the Uniform Limited Liability Company Act (ULLCA), there is a lot of interest and some confusion about how to start an LLC in Arkansas. Even with the changes, establishing your LLC need not be difficult or confusing. But it does require a certain amount of preparation, which is why we created this step-by-step guide to help you set up an Arkansas LLC.
Before Forming an Arkansas LLC
In the early stages of establishing your business, you must first handle a few important details. Read the sections below to learn what you need to take care of before going ahead with your LLC formation.
Reserve an LLC Business Name
It would be a disappointing waste of time to file your Arkansas LLC paperwork only to get rejected because the business name you used is unavailable. You may double-check name availability through the Secretary of State’s official website.
After you determine the name is available for use, you should submit Form RN-06 or the Application for Reservation of a Limited Liability Company Name. In addition to the PDF download, you can submit Form LLC-05 to complete the process online. The fee to file by mail is $25, while if you complete the process online the price is $22.50.
Arkansas lets you hold a business name for up to 120 days. Remember that your LLC name must include either “limited liability company” or an appropriate abbreviation.
Have a Registered Agent
The registered agent accepts mail for an LLC, including important state, court and tax-related documents. In Arkansas, you can act as your own agent on behalf of the business, provided you are at least 18 years old and have a street address within the state. The agent must also keep regular business hours.
If that is not possible, you can hire a separate individual or company to act as your registered agent. Prepare to pay between $50 and $300 for professional services. If you decide later that you’d like to change your registered agent, you can file Form DO-03 to make updates at no charge.
Be Mindful of Recent Changes to LLC Law
As previously mentioned, Arkansas has overhauled many of its laws related to how LLCs are formed and operate within the state. Previously, LLCs were governed according to the Small Business Entity Tax Pass-Through Act. This changes LLC formation documents from “Articles of Organization” to a “Certificate of Organization.” Additionally, an operating agreement, while still recommended, is no longer a requirement.
File Your Arkansas LLC Paperwork
When you are ready, you may submit Form LL-01, the Certificate of Organization for Limited Liability Company, online or print out PDF forms for submission by mail or in person. This form includes registration for Arkansas Corporate Franchise Taxes, which all for-profit businesses are required to pay. The “paper” or offline filing fee is $50; it costs $45 to file your LLC documents digitally.
Instead of filing a Certificate of Organization, foreign entities wishing to establish LLCs must complete Form FL-01, the Application for Certificate of Registration of Foreign Limited Liability Company. This can be done through the Secretary of State website for $270 or by completing paperwork offline for $300.
What To Do After Starting an LLC in Arkansas
The immediate process of forming your LLC is complete; however, you must take some additional steps for your company to remain in good standing within Arkansas. Below are a few crucial details to carry out after establishing your business.
Get an Employer Identification Number (EIN)
An EIN, sometimes called a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN), is required for most businesses. In the case of single-member LLCs, it’s possible to use a Social Security number (SSN). Still, EINs work well for one-member LLCs because they help protect one’s SSN from identity theft as well as preserve your privacy. You can quickly obtain your own EIN for free at the IRS website.
Pay Your LLC Franchise Taxes
Per the Arkansas Corporate Franchise Tax Act of 1979, LLCs must pay a yearly franchise tax. It is critical to pay your annual taxes on time; failure to do so will result in late fees, penalties and even getting your ability to operate within Arkansas revoked.
The annual fee, due May 1, is $150 regardless of whether you file online or submit paper documents.
Create an LLC Operating Agreement
Until recently, LLCs were required by Arkansas to have an operating agreement, which is a document that lays out how you intend to operate your business from the beginning. It includes various details about member roles and financial obligations.
Though no longer a legal obligation for LLCs operating in Arkansas, it is a great way to showcase your sincere long-term intentions for the business. Moreover, it provides your business with a sense of legitimacy and a mutually agreed-upon set of guidelines for members and owners.
LLC State Guides
Frequently Asked Questions
What Is an LLC?
An LLC balances the relative ease and flexibility of a partnership or sole proprietorship structure with the increased risk protection of a corporate structure. Like corporate shareholders, LLC owners (known as “members”) enjoy limited liability, meaning personal liability to the company includes only what members have invested and does not extend beyond it to cover corporate losses or debts.
By default, members of an LLC pay taxes as a share of personal income just as owners of a sole proprietorship or general partnership would—this is often referred to as a “pass-through” tax structure. An LLC can elect to be taxed as a C corporation (C-corp) or S corporation (S-corp) if it meets certain requirements. Many small business owners choose LLCs for their simplicity and flexibility.
How do I file an LLC in Arkansas?
Domestic LLCs complete Form LL-01 and pay $50; foreign entities creating LLCs in Arkansas submit Form FL-01, costing $300. The prices are reduced to $45 and $270, respectively when filing online.
Is an operating agreement still required in Arkansas?
Because Arkansas adopted the Uniform Limited Liability Company Act or ULLCA, operating agreements are no longer a legal obligation for LLC formation.
How do I file taxes for my LLC?
Most LLCs in Arkansas must pay a state franchise tax of $150, due yearly on May 1. The IRS typically treats single-member LLCs as pass-through entities, tax-wise, in that these businesses do not pay taxes or have to file returns. Instead, the individual LLC member pays federal and state taxes themselves. Multiple-member LLCs may be taxed as partnerships unless members agree to the LLC getting taxed as a corporation.
What are the benefits of setting up an LLC?
LLCs are beneficial because they are typically much cheaper to establish than corporations. In some cases, LLCs do not require additional tax filings. Moreover, LLC assets are treated as separate from private assets, providing business owners a level of liability shielding.
