Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Arkansas, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting an Arkansas LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in Arkansas?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Arkansas LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
AR LLC Start-up costs
There are two primary start-up costs in Arkansas. The most important one is the Articles of Organization. The fee is $45 (plus a $5 fee if you choose to file by mail). You can’t avoid this cost, though. You can’t avoid this cost, though. After all, the Articles of Organization is the document that officially forms your business in the state. Without it, you’re not a recognized business.
Then there’s business licenses to consider. Unlike a lot of states, Arkansas doesn’t administer a general business license on the state level. Instead, the state lets local jurisdictions decide whether they will require a general license. So to know if you need a general business license (and, in turn, the accompanying application fee), we recommend checking with your local government office.
Besides that, Arkansas also requires a wide variety of professional licenses: acupuncturists, body piercers, and insurance consultants, to name a few. There’s a good chance that one or more will apply to your business. But since there’s a huge variety of licenses, we can’t list all the different application fees. For more information, check out the Arkansas Division of Workforce Services.
Ongoing costs for an LLC in AR
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Licenses are pretty unique from business to business: the ones your LLC needs won’t apply to your next-door business neighbor. So not only is it hard for us to list the initial license application fees, it’s also hard to list the license renewal fees. This guide would get tedious if we did. It’s up to you to know what the renewal procedures are for your general business and professional licenses. When you obtain your licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Arkansas, one of the biggest annual costs you’ll have will be taxes. That’s because Arkansas has a unique tax process. For starters, there’s the income tax; how much you pay depends on your taxation structure. LLCs taxed as individuals will pay a rate ranging between 1% and 6.5%; LLCs taxed as corporations will pay a flat rate of 6.5%. But on top of that, Arkansas has a Franchise Tax, which applies to your business whether you make a profit or not. It’s due every year by May 1st.
There’s also a wide variety of miscellaneous business taxes that might apply to your LLC. For example, Arkansas requires taxes for fantasy sports, tire waste, hard cider, and more. For more information about Arkansas business taxes, check out the Starting a New Business in Arkansas guide provided by the Department of Finance and Administration.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
Earlier, we mentioned the business franchise tax; it’s a very important filing, because it also serves as your annual report. Some states have a separate process, but Arkansas combines the two. You can file online or by mail using this form, but there’s a $150 filing fee. As long as you file it by May 1, you won’t be charged any late fees, and you’ll maintain your good standing in the state.
What are the discretionary costs to form an Arkansas LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Arkansas doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Corporation Entity Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing an Application for Reservation of Name. You should only file this form if you’re not yet ready to file your Articles. Otherwise, you’d be wasting your hard-earned cash. Arkansas requires a $22.50 fee for this filing (plus $2.50 for mail-in filings), but it protects your name for 120 days. If that’s still not enough time, Arkansas allows you to renew this reservation one time for an additional 120 days.
2. Obtaining a Fictitious Name
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Articles of Organization, is the legal name of your business. A fictitious name, sometimes called a DBA, an assumed name, or a trade name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
A fictitious name acts kind of like a nickname for your business; some LLCs and corporations also use fictitious names to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use a fictitious name, if it differs from your legal name, you need to register it before you can use it.
Quick note: fictitious names in Arkansas are not protected. Any number of businesses can use the same fictitious name—provided the name does not infringe on the legal name of a registered corporation or LLC. You should run a Corporation Entity Search to ensure that your desired name isn’t already in use by an established business.
You can register your Arkansas fictitious name by filing an Application for Fictitious Name. LLCs have to pay a $25 fee. And once it’s filed, you’re not quite done; you’ll also need to declare your name with your county clerk. You run the risk of hefty fees if you skip this step.
Unlike many states, Arkansas does not require a renewal for fictitious names; they’re perpetual.
3. LLC formation services
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Paperwork is a massive hassle. And unless you’re starting an LLC to help other Arkansas residents with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting an Arkansas LLC: the Articles of Organization, business licenses, annual franchise tax reports—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of options, with ZenBusiness offering packages starting at $0 + state fee. You can also take a look at other well known services like LegalZoom, Northwest, and Incfile that have other types of pros.
These services are completely optional; you can DIY your Arkansas LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying.
4. AR Registered agent services
Arkansas law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Arkansas allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Arkansas registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
In Arkansas, the filing speed of your Articles of Organization depends on how you choose to file: online filings usually require 2-3 business days for processing, while mail-in filings can take as long as 2 weeks. Granted, that time varies based on the volume of filings the Secretary of State has to work through, but that’s a good window to plan for.
If that sounds like too long to wait, Arkansas allows you to expedite your form for a $50 fee. Since the expediting fee is pretty reasonable, it may be worth the extra expense to expedite your filings, but patience works, too. You can let your budget and your timetable be the deciding factors.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Arkansas business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting an Arkansas LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (perhaps with the exception of the $150 annual franchise tax report fee). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Arkansas LLC off on the right foot. We wish you and your new business the best!