Frequently asked questions about starting and running an LLC, or limited liability company.
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.
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.