A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in Arkansas. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
Under Arkansas law, an LLC must have the words "Limited Liability Company," "Limited Company," or the abbreviation "L.L.C.," "L.C.," "LLC," or "LC." The word "Limited" may be abbreviated as "Ltd.," and "Company" may be abbreviated as "Co."
Companies which perform professional services must use the words "Professional Limited Liability Company," "Professional Limited Company," or the abbreviations "P.L.L.C.," "P.L.C.," "PLLC," or "PLC." The LLC name cannot 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."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the Arkansas Secretary of State. Names may be checked for availability by searching the Arkansas Secretary of State business name database.
An available name may be reserved for 120 days by filing an Application for Reservation of Limited Liability Company Name with the Arkansas Secretary of State. The form may be completed and filed online or by postal mail. The filing fee is $25 if done by mail or $22.50 if done online.
Every Arkansas LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The agent should agree to accept service of process on behalf of the limited liability company prior to designation. The registered agent may be (1) an individual who is a full-time resident of Arkansas, or (2) a business entity registered with the Arkansas Secretary of State.
An Arkansas LLC is created by filing Articles of Organization (Form LL-01) with the Arkansas Secretary of State.
The articles must include:
The filing fee is $45 if done online or $50 if done with paper copies.
All of the paperwork and procedural steps to start a limited liability company can be done online using Nolo's Online LLC Formation service.
An LLC operating agreement is not required in Arkansas, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. If an operating agreement is created, it need not be filed with the Articles of Organization.
If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
All LLCs and foreign LLCs must pay a minimum $150 tax to the Arkansas Secretary of State each year. Annual franchise tax reports must also be filed with the Arkansas Secretary of State. You can file the annual franchise tax report online or download a report form from the Arkansas Secretary of State website. The franchise tax report, including the $150 tax payment, is due each year by May 1. There are penalties for late reports.
In some cases, for example if you will be selling goods and collecting sales tax or if you have employees, you’ll need to register with the Arkansas Department of Finance and Administration (DFA). For most purposes, you can either register online (using the Arkansas Taxpayer Access Point (ATAP)) or on paper (using Form AR-1R, Combined Business Tax Registration Form). For more information on state LLC tax registration, see Nolo's article Arkansas LLC Annual Filing Requirements.
If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the Arkansas Secretary of State. You can conduct a name search for free on the Arkansas SOS website to make sure your proposed name is available.
Filing on your own is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $49.00. To learn more about the costs associated with forming and running an LLC, see How Much Does It Cost to Form an LLC?
Arkansas does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For local licenses, check with the city in which the business is located (or county if you are in an unincorporated area). For state license or permit requirements, check with the Arkansas Department of Workforce Services.
All LLCs organized outside of Arkansas must register with the Arkansas Secretary of State to do business in Arkansas. Foreign LLCs must appoint a registered agent for service of process physically located in Arkansas. To register, file an Application for Certificate of Registration of Foreign Limited Liability Company. The application may be completed and filed online or by postal mail. A certificate a certificate of existence or similar document from the LLC’s home state must also be filed with the Secretary of State. The filing fee is $270 if filed online, $300 if a paper application is filed by mail.
Before filing, make sure the LLC’s name is available in Arkansas by checking the Arkansas Secretary of State’s business name database. If the name is not available, the foreign LLC may use a designated name to transact business in Arkansas. To do so, it must deliver to the Arkansas Secretary of State for filing a copy of the resolution of its members certified by its secretary adopting a designated name.
For most formation purposes, a Arkansas single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in Arkansas are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo’s article, How Single-Member LLCs Pay Federal Income Tax.
If you provide a licensed professional service in Arkansas and want to form an LLC, you will be required to form a professional limited liability company (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a Arkansas state license before practicing, then you are a professional service. Under Arkansas law, LLCs can be formed to provide professional services. However, only one specific type of service may be provided and all the owners of the LLC must be licensed or registered to perform the professional service for which the LLC was organized.
To learn more about forming a Arkansas PLLC, see our article, How to Form a Professional LLC in Arkansas.
If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take.