Setting up a Company in Arkansas
When considering starting a business in Arkansas it is important to consider which type of company structure is best suited to your business now and in the long term.
There are many types of business entity in Arkansas. Typically corporations and LLCs are the most popular due to the advantages they offer in terms of high level of liability protection in the state.
A corporation is a legal entity which exists apart from its owners and shareholders. The corporation has its own rights, privileges, and liabilities separate to the board of directors, shareholders and officers. A corporation can buy and sell property, enter into contracts sue and be sued. Elected officers and its board of directors manage the corporation.
Corporations can be created by filing Articles of Incorporation with the Arkansas Secretary of State. They can be formed for profit or non-profit purposes but require more extensive record keeping. Profits of the corporation are taxable by state and federal taxing authorities, as are profits distributed to the owners by dividends.
Limited Liability Companies combine more favourable characteristics of corporations and partnerships. One of the biggest attractions of an LLC is the limited liability provided to its members.
As this is a relatively new form of business organisation, LLCs have fewer regulations on record keeping. Articles of Organisation must be filed with the Arkansas Secretary of State in addition to annual franchise tax reports. The company may be taxed by the Internal Revenue Service as corporations or as partnerships depending on the structure. Members can manage the company themselves or elect a manager, and engage in management without the risk of losing their limited liability status.
How to set up an LLC in Arkansas:
• Choose a name for your company that is distinguishable from any other business in Arkansas. It must include the words Limited Liability Company or Limited Company at the end. They can be abbreviated.
• Search the federal patent and trademark database to make sure the name doesn’t infringe on any federally registered trademarks.
• Next reserve the name with Arkansas to stop someone else from using your company name.
• If you are filing online, download the Articles of Organisation for Limited Liability Companies from the state’s website. You can use this document as a checklist for the information needed for LLC registration.
• The form will require the name of your company, address of the company, and whether it is member managed or manager-managed.
• Download the Limited Liability Company Franchise Tax form from the State’s website.
Frequently Asked Questions
How does my business obtain an EIN or federal ID number?
The Employee Identification Number is obtained from the Internal Revenue Service.
How do I get a tax number?
A tax number may refer to a sales tax identification number and can be obtained from the Revenue Division of the Department of Finance and Administration.
How long does it take to complete a filing with the Corporations Division?
The Division completes most filings such as articles of incorporation, amendments, mergers or dissolutions within two business days of receipt. If you choose to visit the office in person the filings can often be completed while you wait.
How does a corporation become an “S- Corp?”
The Internal Revenue Service grants the “S-Corp” designation when a corporation elects to be taxed under Subchapter S of the Internal Revenue Tax Code. Being an “S-Corporation” is a tax matter only.