How to Start a Business in Arkansas:
Research shows that Arkansas has the fifth-lowest cost of living across all 50 states, as well as relatively low business costs. Industries such as agriculture, aerospace and defense, transport and logistics, as well as food and beverage are key drivers of economic growth within the state, which is above average when compared to the rest of the US.
Form your business.
Review Arkansas formation options.
Arkansas offers twelve main ways of forming your business. Review these closely and pick the one that fits your business best.
Check name availability.
Once you've found the perfect business name, you'll want to be sure that no one else is already using it. Start by conducting a state-level search.
If you need help finding a business name, be sure to check out NameSnack's free business name generator.
Navigate to the Arkansas Secretary of State (SOS) website.
You'll be able to search the records of all existing corporations, cooperatives, insurance companies, and banks to identify whether your name is unique. We recommend leaving the default selection — "All Types" — as-is to conduct a comprehensive search.
Enter the business name you'd like to search for.
Omit designators such as "LLC," "Ltd.," and "Inc." from your search term(s).
Leave the remaining fields blank.
If there are matching records, you'll receive a notification that reads "[x] records found." Comb through these and click on them to view more detailed information. Alternatively, you'll receive a message stating "There were no records found!" In both instances, it may be helpful to repeat the search using slightly different terms.
Reserve your business's name.
Corporations and LLCs that wish to reserve a unique business name can do so for 120 days. Name reservations allow business owners to gather and submit their formation documents without the risk of someone else claiming the name during that time.
For-profit and nonprofit corporations should complete an electronic or hard copy application and submit it online or via mail, respectively. Electronic applications cost $22.50, while mailed ones cost $25.00. The 120-day reservation period is nonrenewable.
Get an employer identification number.
Nearly all businesses will need to register for federal taxes by applying for an employer identification number. There are three ways to apply: online (recommended), via mail, and by fax. International applicants can apply over the phone.
Register your business in Arkansas.
Depending on your legal structure of choice, you may need to file one or more documents to have your business recognized by the SOS. Most formation documents must be submitted via mail, but some can be filed online, too.
Most sole proprietors don't need to file any formation documents with the state. However, those who wish to operate under a name other than their own must register their trade name with their local county clerk.
The same applies to individuals wishing to establish a general partnership. These businesses can, however, submit a Statement of Partnership Authority if they want their business to be recorded by the SOS. This costs $50.00 and can only be done via mail.
Limited partnerships are formed by submitting a Certificate of Limited Partnership. This can only be done via mail and costs $50.00.
Limited liability partnership (LLPs) are created by submitting an Application for Qualification of Limited Liability Partnership via mail, which costs $50.00.
Limited liability limited partnerships (LLLPs) are established by submitting a Certificate of Limited Liability Limited Partnership via mail. There is a $50.00 filing fee.
Corporations are created by submitting Articles on Incorporation. For-profit corporations can file online for $45.00 or via mail for $50.00. Benefit corporations can only submit their paperwork via mail and must pay a $50.00 filing fee.
S corporations are established by submitting Articles of Incorporation online or via mail, which costs $45.00 and $50.00, respectively. The process is finalized when they file Form 2553 with the Internal Revenue Service (IRS).
Commercial registered agents are created by submitting a Commercial Registered Agent Listing Statement. This can only be done via mail and costs $50.00.
Obtain necessary permits and licenses.
Depending on the nature of your business's activities, you may need to obtain at least one license and/or permit from the state. For example, child care businesses and those who sell alcohol and/or cigarettes will need to be licensed by the state.
Certain professionals must also be awarded a state license before they can operate. Examples of regulated occupations include:
Be sure to visit discover.arkansas.gov to learn more about state-specific licensing requirements.
Remember that you may need to acquire local licenses and/or permits. Additional information can be obtained from the Arkansas Small Business and Technology Information Center.
Register your business for taxes.
Sign up for taxes via the Arkansas Taxpayer Access Point.
One of the easiest ways to register for most business taxes is via the Arkansas Taxpayer Access Point (ATAP). For example:
- Businesses that employ workers within the state need to open a withholding tax account, which will allow them to withhold an amount from employees' wages to pay to the government.
- Businesses that sell most products and certain services are required to pay sales tax. Detailed information about inclusions and exemptions can be found in the state's gross receipts, compensating use, and special excise tax download.
The ATAP allows businesses to register for these and other tax accounts.
Navigate to atap.arkansas.gov.
Click "Register New Business."
Indicate whether you are a remote seller and/or marketplace facilitator.
Select "Click here to register your business."
Click on "Step 1: Business Ownership Structure."
Provide some information about your business.
Click on "Step 2: Customer Information."
Enter some more information about your business, including your contact information.
Scroll to the address(es) you entered and click on "Verify address."
Click on "Step 3: Tax Types to Register."
Select the tax account(s) you would like to register for.
Click on "(Register)" next to the tax account(s) you would like to open. You'll find this under step 4.
Enter the relevant information.
Upload one or more attachments, if needed.
Click "Step 5: Review / Pay Fees Due."
Indicate whether you want to pay the applicable fee(s) (if any) online.
Jot down the payment details if you'd prefer to pay via check or money order instead.
Enter and re-enter your email address.
Write down your confirmation number and/or print your confirmation notice.
Remember to pay the fee(s) (if any) if you opted to pay by check or mail order.
Register for unemployment insurance tax.
Almost all of those who meet the state's definition of an "employer" must register for a state unemployment insurance account (SUTA) with the Arkansas Division of Workforce Services (DWS). Benefits will be used to support workers who become unemployed and are deemed eligible for benefits according to the state's Division of Workforce laws.
Navigate to workforce.arkansas.gov.
Click on "Register for DWS Employer Account" in the left-hand column.
Select your employer registration option.
Enter your EIN.
Provide some basic information about your business and employees.
Enter your personal details, as well as that of your second officer or partner, if applicable.
Note the legal and trade name(s) of your business, as well as physical and mailing address(es). Then, describe the nature of your business.
Declare that the information you've provided is true and accurate and that you are authorized to complete the application on behalf of the business. You'll need to re-enter your name and contact details.
Review the information you've entered to confirm that everything is in order.
Jot down your unemployment insurance tax account number. Look out for a confirmation email that will contain this number, as well as your tax rate. Be sure to call (501) 682-3798 if you don't receive this within 48 hours of submitting your application.
Hire and report new employees.
Report your staff to the state.
Federal and state regulations stipulate that employers must report their newly hired and re-hired staff members within 20 days of their appointment. Information should be submitted to the Arkansas New Hire Reporting Center, specifically. This can be done electronically or in hard copy form.
Regardless of how employers choose to submit, the following employee-related details are required:
- Full name. Employers have been asked to identify the first, middle, and last names.
- Social Security Number.
- Start date.
- State where the employee was hired (if the business is classified as a multistate employer).
Employers also need to provide their:
- Corporate name.
- Address where income withholding orders ought to be sent.
- EIN. Those who possess more than one EIN should indicate the one used to report their quarterly wage data.
Electronic reporting can be done via the Arkansas New Hire Reporting Center's website or by creating and submitting electronic new hire reports.
Nonelectronic reporting can be conducted by downloading and submitting the new hire reporting form via mail or fax, creating and filing a printed list containing the new hire information, or by submitting a W-4 form as evidence of the new hire.
To submit electronically via the New Hire Reporting Center's website, start by navigating to newhire-reporting.com/AR-Newhire/
Click on "Register" in the section titled "Online Reporting."
Provide some information about your business, as well as a password for your account.
Take note of the password requirements outlined on the screen.
Log in to your account.
Click on "Report New Hires/Re-Hires over the Internet" on the right-hand side of the page.
Provide the relevant information about your employee.
Click "Enter Next Record" if you would like to report another employee, or "Finished Entering" if you don't need to submit any other information.
Obtain workers' compensation coverage.
Most employers who have three or more employers must offer workers' compensation insurance. There are exceptions to this rule — as such, employers with fewer employees should contact the Arkansas Workers' Compensation Commission (AWCC) instead of assuming that the regulations do not apply to their circumstances.
Information about self-insurance can be obtained from the Self-Insurance Division of the AWCC and by consulting Rule 099.5, which can be downloaded in PDF format.
Display the mandatory posters and notices.
State and federal regulations dictate which posters employees should display in their place of work. Examples of compulsory posters include the:
- "Equal Opportunity is the Law" poster.
- "Employee Polygraph Protection Act" notice.
- "Notice to Employees: How to Claim Unemployment Insurance" poster.
- "Workers’ Compensation Instructions to Employers and Employees" form P.
- "Your Rights Under the USERRA: The Uniformed Services Employment and Reemployment Rights Act" poster.
Depending on the nature of your business's activities, you may be required to display additional posters and/or notices. Have a look at the Arkansas Department of Labor and Licensing website to learn more about state-specific requirements, and the US Department of Labor's website to learn more about federal regulations.
Arkansas Business Types:
1. Sole proprietorship.
Sole proprietorships are the simplest business structure. They are owned and operated by just one individual who assumes complete liability for the business's debt. Sole proprietorships are easy to establish, present few legal restrictions, and have relatively few reporting obligations. The owner/operator can also make decisions fairly quickly.
Partnerships refer to the association between at least two individuals who co-own the business. These businesses are typically established through oral or written agreement regarding each partner's duties and the distribution of ownership. Key advantages include easy formation and few reporting requirements.
3. General partnerships.
General partnerships are run by at least two people who have joint ownership of assets and share responsibility for the business's debt. Most compile a partnership agreement to outline each partner's responsibilities. These businesses are fairly easy to create and allow people to pool their resources.
4. Limited partnerships.
Limited partnerships (LPs) comprise two types of partners. General partners oversee the day-to-day running of the business, while limited partners are typically investors who have limited decision-making power. Key advantages include minimal personal liability for limited partners and the ability to appoint an unlimited number of shareholders.
5. Limited liability partnerships.
Limited liability partnerships (LLPs) offer considerable protection from personal liability. However, partners remain liable for their personal professional conduct. LLPs are often taxed in the same way as partnerships but can opt to be taxed as corporations. They work best when owners belong to one profession, such as law.
6. Limited liability limited partnerships.
Limited liability limited partnerships (LLLP) are a form of LP. The IRS treats them as partnerships for tax partnerships, but LLLPs have the added benefit of protecting general partners from being liable for the business's debt. Many real estate companies choose to register as LLLPs.
7. Limited liability companies.
Limited liability companies (LLCs) are owned by a minimum of one person (or "member") who is regarded as legally distinct from the business. This offers personal protection from liability for the business's debt. LLCs have less recordkeeping duties than corporations and can choose to distribute profits in numerous ways.
Corporations can be established as for-profit or nonprofit entities. They are legally distinct from their owners (termed "shareholders") who are not personally liable for the business's debt. The key advantages of this structure include its unlimited lifespan and the easy transfer of ownership. However, corporations may be taxed twice.
9. S Corporations.
S Corporations are entities that elect to have their tax burdens passed to the owners instead of the business itself. This helps owners avoid double taxation, and may afford additional tax deductions. However, unlike standard corporations, S corporations can only have one class of stock. Moreover, they cannot have more than 100 shareholders.
10. Nonprofit Corporations.
Nonprofit corporations are often established for public benefit purposes, but may also be formed to mutually benefit their owners or to serve religious purposes. These entities use their income to further their goals. One key advantage is the possibility of being awarded tax-exempt status.
11. Commercial Registered Agents.
Commercial registered agents are people or businesses that offer registered agent services. They can be formed relatively easily and are regulated by clear, well-established guidelines.
12. Non-Filing/Non-Qualifying Entities.
Non-filing/non-qualifying entities are those that need not register or file formation documents to conduct business within the state. Choosing to register in this category ensures that the SOS has some information about the business, but it doesn't prevent other businesses from using the entity's name.
Fees for Starting a Business in Arkansas:
Online Filing Fee
Paper Filing Fee
Statement of Partnership Authority
Certificate of Limited Partnership
Application for the Qualification of Limited Liability Partnership
Certificate of Limited Liability Limited Partnership
Articles of Organization for a Limited Liability Company
Articles of Incorporation for a For-Profit Corporation
Articles of Incorporation for a Benefit Corporation
Commercial Registered Agent Listing Statement
Application for Reservation of a Corporate Name
Application for Reservation of a Limited Liability Company Name
How much does it cost to register a business in Arkansas?
Filing fees vary depending on the structure of the business and, in some cases, whether applicants choose to submit via mail or online. You will likely pay somewhere between $45.00 and $50.00 to file formation documents, and another $25.00 if you would like to reserve your name while you prepare to register your business.
What permits do I need to start a business in Arkansas?
It varies by business. The state does not have a general business license. However, certain business activities and professions are regulated at the state level. Further details about these and local regulations can be sourced from the Arkansas Small Business and Technology Information Center.
Is Arkansas a good place to start a business?
Yes. Business and living expenses are relatively low, and economic growth within the state is above average compared to the rest of the US.
Do I need a business license in Arkansas?
Arkansas does not have a general business license. However, you may need one or more state-issued licenses and/or permits, and possibly local licenses and/or permits.
How do I get a sales tax permit in Arkansas?
You can apply via the Arkansas Taxpayer Access Point (ATAP). We've created a detailed, step-by-step guide to help you with this.