Last Updated on June 13, 2022 by Fair Punishment Team

One of the big choices you’ll need to make when creating a business is the kind of business that you want it to be.

If you’re starting a small to medium-sized business, two of the main types you’re likely to see recommended to you are a Sole Proprietorship and an LLC – Limited Liability Company.

LLC’s offer you a lot of flexibility and separation between your own assets and that of your company, so it’s a popular choice for a lot of different businesses that hope to expand and grow throughout the years. 

But here’s the thing – starting an LLC can be difficult. If you want to get started you might run into a wall of different forms and decisions that you have to make before you’ll be able to get the show on the road. That’s why we’ve written this article!

Below, we’re going to break the process down into 5 simple steps that will take you to the formation of your LLC, adding some tips within each section that will help you along the way.

We’ve also made sure to include a short FAQ that will help answer any questions you may have leftover by the end. Let’s create your Arkansas LLC right away!

What Is An LLC?

The abbreviation ‘LLC’ stands for Limited Liability Company. What this allows you to do is separate your own personal assets from that of your company.

You might be wondering why this is important – in short, separating your assets from the company’s can be very important for protecting yourself in possible lawsuits and navigating a wide range of situations that may occur throughout the lifecycle of your business. 

LLC’s are one of the most common forms of business within the State of Arkansas, and many people choose to form them because of the liability protection that they offer.

It’s worth noting that creating an LLC requires a few extra steps compared to something like a Sole Proprietorship, so you’ll have to make sure that it’s the right decision for your business before you commit to making one.

Why Would You Form An LLC?

The main reason to form an LLC is for future protection against lawsuits. An LLC means that creditors or lawsuits won’t be able to retrieve assets from your personal accounts.

This means that you won’t be liable for any bad outcome that comes as a result of the expansion and growth of your business – in this way your company acts as its own separate entity. 

If you’re looking to make a company that is expected to grow, or you suspect there is any chance of encountering legal issues on your journey, an LLC might be the right choice for you.

If you’re a small business, deciding between an LLC or a Sole Proprietorship can be difficult, but if you want to know more about the differences, check below for our FAQ that will delve deeper into Sole Proprietorships and the kind of businesses they match well with.

How To Start An LLC, Step By Step Guide

If you’ve taken a look at the list of things you’ll have to do in order to form an LLC, you might feel overwhelmed. Thankfully, we’re here to help you with that! We’ve broken the process down into 5 simple steps.

Before we begin, it’s worth noting that these steps may differ depending on the state that you are in, so we’ve made each step specific for the state of Arkansas. 

Step 1 – Naming Your LLC

Naming your business is one of the most exciting parts, and although you have a lot of freedom in terms of what you can call it, it’s important to know that there are some restrictions.

You’re going to need to make sure that your company name is original, and that it adheres to the State of Arkansas naming laws and requirements. We’re going to outline all of these for you below: 

1. One of the most important things is that it contains (in some way) the words “Limited Liability Company.” You can shorten this c considerably by picking either “L.L.C,” “L.C,” “LLC,” or “LC.” If you want to shorten things further, you can also abbreviate the word “Limited” to “Ltd.,” or “Company” to “Co.”
2. If your company is classified as “Professional” (that is to say, a company that offers professional services), then you’re going to need to also contain the word “Professional.” As we outlined before, you can abbreviate this to either “PLC,” “PLLC,” “P.L.L.C.,” or “P.L.C.”
3. The next thing you’ll need to keep in mind is ensuring that your LLC’s name is distinguishable from the names of other companies that are already filed with the Arkansas Secretary of State. This is so that you are easily identifiable, and it’s also worth doing this just so that clients can find yours easily without any confusion. You can check the viability of your name here.
4. You’re able to reserve your name for 120 days if you file an application with the Arkansas Secretary of State. This form can be completed online for $22.50, or $25 for a physical filing.

Step 2 – Appointing A Registered Agent

A legal requirement for all LLCs within the State of Arkansas is to appoint an Agent For Service Of Process.

In short, this is an individual who will register and will agree to accept official legal documents on the path of the LLC. This will come about if you ever run into any kind of legal troubles.

In order to pick one, the person in question will need to hit a few requirements that we will list for you below:

1. They must be an individual who resides within the State of Arkansas
2. Or they must be a business entity that has the authority to do business in Arkansas
3. The person needs to have an address registered within the State of Arkansas.

Appointing a registered agent doesn’t have to be difficult, especially if you’re looking to be one yourself. One thing to note here is that if you choose yourself as your LLC’s registered agent, then you will have to have your name and address added to the public record.

More than this, you’ll need to make sure that you work onsite and keep regular business hours so that you can receive or respond to any legal documents that might come your way. 

Step 3 – File Articles Of Organization

Here is the third and probably most difficult step, especially if you dislike filling out paperwork. In order to create your Arkansas LLC, you’re going to need to file what is known as its “Articles of Organization” (otherwise known as form LL-01) with the Arkansas Secretary of State.

There are a few things that these articles will typically contain, so check carefully below to make sure you have all the information before you start filling one out.

1. The LLC’s Name (providing it meets the requirements mentioned in step 1).
2. The LLC’s Address
3. The Name and Full Address of your chosen, registered agent. 
4. Signature of the organizer (so probably your own signature).
5. A written statement that will outline whether the LLC will be run by a manager or owner.

When it comes to the options you have at your disposal in filing these articles, you can do this either online or with physical paper forms. The filing fee for an online set of articles is $45, and for the physicals, it is $50. 

Step 4 – Operating Agreement

Next up is a step that is not a legal requirement in the state of Arkansas, but it’s something that we heavily recommend you do. You might be wondering what, exactly, an operating agreement is.

In short – it’s an internal document that lays out the finer details of how your LLC will function. A good Operating Agreement will typically include details about the formation, ownership, and general procedures of your company.

This is a document that can be used to settle disputes between owners or other members of the company in future instances, so it’s quite an important thing to have. 

More than anything, an Operating Agreement is a way to make sure that everyone within your company is on the same page.

It gives you some legal backing to do this, and could one day be a vital document that safeguards the integrity of your company, especially if your business grows in size – which is the main goal, right?

Because it needs to be written with precise language and specific terminology, you’re going to need a professional to write it for you.

Typically, Operating Agreements can be created by a State of Arkansas Attorney, and although there may be considerable fees in drafting one, it’s worth doing!

One process that is usually outlined is what happened should an owner pass away, and how ownership can be transferred. Definitely consider creating an official Operating Agreement for the longevity of your company! 

Step 5 – Getting An EIN Number

An EIN or Employer Identification Number is a vital thing to get if you’re looking to have more than one member in your company. You can get this by registering with the Internal Revenue Service (IRS) and requesting one.

An EIN is a 9-digit number that will be used for many different business purposes such as identification and general tax processes.

This is a legal requirement within the state of Arkansas, and something that you must have if you have employed anybody within your company. You might be wondering if you have to get one if you don’t have any members other than yourself.

This would be what is called a one-member LLC, and you will still likely have to get an EIN. An LLC is taxed as a corporation rather than a sole proprietorship, so it’s important that you do this.

The quickest way to get an EIN is to access the IRS website and complete their online application form. You can find the IRS website here, and thankfully there is no filing fee in order for you to complete this step of the process. 

A Note On Your Annual State Tax

This isn’t a step you’ll have to make right away, but it is a yearly obligation that you will have to fulfill as a legal requirement. Every LLC will have to pay a minimum of $150 as a tax fee to the  Arkansas Secretary of State each fiscal year.

You will have to file annual franchise tax reports with the Secretary of State. This can be done either online or in a physical form. Important note – this payment and form are due every year by the 1st of May, and you will run into problems and fines for late reports! 

Final Thoughts 

So we’ve finally reached the end! As a general note, we’d like to say that whilst this list does seem like a lot, it’s actually a lot easier to complete than you might think. Just take another look over all of the steps and try to identify those that might give you some problems.

Many of the forms can be filed online and don’t take all that long – you’ll just need to be careful and make sure that you include all the right information so that they don’t get sent back to you!

Expect these forms to come back to you within a week or two, though some of them can be even quicker than that providing they are done online. If you start the process early then you’re not going to have to wait around too long!

We hope that this article has given you all of the information you’ll need to know to create an LLC within the State of Arkansas and that you can now start without any worries.

This was a fairly long list, so it’s possible you may have some questions left over! If this is the case, check our short FAQ below for some possible answers. We wish you the best of luck in creating your LLC and hope the process is easy for you! 

Frequently Asked Questions 

What Is A Sole Proprietorship?

In short, a Sole Proprietorship is a simple way that you can start a business. Unlike an LLC, it is an unincorporated business that is both owned and managed by a single person with no barrier between their assets and liabilities. This kind of company is far better suited for tiny companies that aren’t looking to turn over huge profits. 

Is Arkansas A Good State To Start An LLC?

One of the biggest pluses of starting an LLC in Arkansas is the concept of ‘S Corporation Status.’ This is where you can convert from a C Corporation into an S Corporation.

What this will do is make your startup able to be taxed in a similar manner to a partnership, which can save you a lot of money in the long run!