Starting up an LLC is not always easy, but there are states that make it less complicated. One of them is Arkansas, where it is possible to create an LLC with relative ease. Anyone interested in creating an LLC, though, needs to know the rules and regulations regardless of whatever state they choose. Each state is a little bit different, so research is required to be sure the best options are being chosen and the right decisions made for LLC creation.

Getting Started

Naming the LLC

An LLC can search online to find what name they can use. Not all names will be available, and there are words that cannot be used as any part of a name, even if they aren’t in use. Restricted words need more paperwork filed to be used, and prohibited words are completely off limits. These are words that are used by federal and state agencies, and allowing for their use by an LLC can confuse consumers. The name of the LLC has to have the words Limited Liability Company or their abbreviation in it, and it’s important to check to see whether the domain name is also available.

Selecting a Registered/Statutory Agent

A registered agent is a person or entity who is authorized by an LLC to receive official correspondence. It can be a single person or a corporation, but there are some regulations on who can be an LLC’s registered agent. The person must live in the state and be a resident, and if a corporation is used it must be authorized to do business in the state of Arkansas. An individual within the LLC itself can serve as a registered agent, and that includes the owner of the company.

Filing Articles of Organization

The Articles of Organization for a Domestic LLC can be filed online for a fee of $50. These Articles are, essentially, the lifeblood of the company and the documents that make it official. They provide information on who is operating the company, how large it is, and other factors that are important to note for tax, insurance, and other purposes. By filing the Articles, the LLC is showing an intent to develop and to form in that state for the purposes of operating a business.

Creating an Operating Agreement

The majority of states do not require operating agreements, and Arkansas is among that group. That makes things much easier, although many LLCs decide to create an operating agreement for their own peace of mind. Doing that is certainly possible and an accepted practice, but there’s no need to do it for the state’s requirements. An LLC can be formed perfectly legally in Arkansas without any type of formal or informal operating agreement.

Running Your Business

Getting Your EIN

What’s an EIN?

An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business.

You’ll need an EIN to

  1. Open a business bank account.
  2. File Federal and State Taxes
  3. Hire employees.

Before you get your EIN:

  1. Make sure your new business has been properly formed before applying.
  2. Be wary of paid sites. EINs are free direct from the IRS.

How do I get an EIN?

  1. Apply online: The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen.
  2. Call: You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday.
  3. Snail Mail – You can download the form and mail it in.

Keep Business and Personal Accounts Separate

  1. Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life A LOT easier come tax time.
  2. Get a business credit or debit card. This will help you keep your expenses separate and easier to track.

Accounting

No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend.

A good accounting system is necessary to:

  1. Track income and expenses, so you can easily see if you’re making money
  2. Makes filing income taxes so much easier.

Always try and find something that will:

  1. Sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync.
  2. Automatch vendors, customers and other accounts.
  3. Let you accept credit cards and ach drafts with ease.

Setting Up for Taxes in Arkansas

An Arkansas LLC will need to set up for specific kinds of taxes.

Unemployment

The unemployment insurance tax is based on ensuring that people who need employment benefits can get them, and that there are funds available.

Income

Arkansas requires LLCs that have employees to pay employee withholding tax, which is essentially income tax.

Sales Tax

Sales tax, along with any required business licenses, are also necessary. What licenses are needed depend on the business and the number of employees, along with what is being sold and where. Additionally, sales tax is only needed if the LLC sells goods or services that the state considers taxable. Not every LLC may fall into this category, but it is always best to check. LLCs will want to get an EIN, too, so they can hire employees, pay taxes, and open a bank account in the name of the company.

Getting Insurance for your LLC

Every Arkansas LLC needs Workers’ Compensation insurance. This protects the business and the employees if there is an injury. However, Arkansas does not require other types of business insurance. That could put an LLC at risk, and having general liability and other types of insurance may be the right choice even though the state is not asking for them. In those cases of cases, more is often better, and it is difficult to have too much insurance for most business needs. Protecting an LLC for the long term is important.

Keeping Your LLC Compliant

Arkansas has hiring guidelines that need to be followed. These protect workers from unfair hiring practices, and also help reduce the chances of a business hiring workers who are not legally authorized to work in the United States. Many states also require the filing of an annual report, but Arkansas doesn’t have that requirement. With no annual report requirement, it s one less thing that an LLC in that state needs to worry about.

How to File a Foreign LLC in Arkansas

It is possible to register a foreign LLC in Arkansas. It costs $270 if filed online and $300 for a paper filing.