How to Qualify as a Foreign Business in Arkansas

Learn the rules for qualifying your LLC to do business in Arkansas.

By , Attorney

If you own a business that was created in a state other than Arkansas, you will need to qualify or register that business in Arkansas if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Arkansas) limited liability company (LLC) to do business in Arkansas.

What is a Foreign LLC?

For Arkansas purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Arkansas. In other words, foreign doesn't mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Indiana is a foreign LLC in Illinois.

Transacting Business in Arkansas

According to Arkansas's LLC Act, you are required to register your foreign company with the state of Arkansas if you are "transacting business" in Arkansas. What does this mean? Well, like most states, Arkansas's LLC Act does not specifically define the phrase "transacting business" in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state's residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo's articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, Arkansas's LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

  • defending or settling a lawsuit
  • dealing with internal business affairs such as holding member or manager meetings
  • having a bank account in the state
  • having an office, agency, or persons in the state for handling your company's own securities
  • selling through independent contractors
  • soliciting or obtaining orders if the orders require acceptance outside the state before they become contracts
  • creating or acquiring indebtedness, mortgages, or security interests in real or personal property
  • securing or collecting debts
  • owning, without more, real or personal property
  • conducting an isolated transaction that is completed within thirty days and is not one in the course of similar, repeated transactions; and
  • transacting business in interstate commerce.

The LLC Act also indicates that this list is not exclusive; other activities also may be exempt. For the full, legal description of each of the listed items, check Section 4-32-1008 of the Arkansas Revised Statutes.

If your LLC's only activity in Arkansas is one or more of the listed items, you should not need to register with the state.

Certificate of Registration

To register your business in Arkansas, you must file an Application for a Certificate of Registration with the Arkansas Secretary of State (SOS). You can download a copy of the application form from the SOS website. (The full name printed on the form is Application for Certificate of Registration of Foreign Limited Liability Company, which is a mouthful; it's Form FL-01.)

To complete the application, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for the Arkansas application, you need to provide:

  • the name of your LLC as registered in the state where it was organized
  • if necessary, the fictitious name under which your LLC will transact business in Arkansas (necessary if your LLC's original name or something very similar is already being used by an Arkansas registered business or if the name does not complying with the state's LLC naming rules)
  • the state where your LLC was organized
  • the date when your LLC was organized
  • the duration (termination date) for your LLC
  • the name and street address of your LLC's registered agent in Arkansas
  • the street address of the office required to be maintained in the state where your LLC was formed or, if no such office is required, the street address of your LLC's principal office
  • a certificate of existence or equivalent document, and
  • an authorized signature.

The certificate of existence or equivalent document (such as a certificate of good standing) usually will be issued by the secretary of state in your LLC's home state.

If your LLC will use a fictitious name in Arkansas, you must also include a copy of a resolution of the LLC members, certified by the LLC secretary, that the LLC adopts the fictitious name. You can file by mail or online. The filing fee is $300.

What Happens if You Don't Register?

If your LLC transacts business in Arkansas without registration, it cannot bring a lawsuit in any of the state's courts. The LLC also will be liable for all the fees that otherwise would have been due had the LLC properly registered. Furthermore, the LLC is subject to a civil penalty of up to $5,000 per year. However, not being registered does not invalidate your LLC's contracts or prevent it from defending a lawsuit in Arkansas. Also, a member of the LLC is not liable for the LLC's debts and obligations solely because the company transacted business in Arkansas without registration.

Registering a Foreign Corporation

If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Arkansas are similar. You will, however, have to use a different application form. See the Arkansas Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in Arkansas.

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