Start a Business in Arkansas

Entrepreneur’s guide to forming a business in Arkansas

This is the age of entrepreneurs. If you can see potential in this market for your product or services, then it’s time to register a business in Arkansas. You can ask why it should be Arkansas and why not any other state. It’s a valid question, and yes, location is one of the important factors when it comes to forming a new business. The state of Arkansas is considered a hotspot for new businesses due to robust infrastructure, a favorable regulatory environment, and access to a wide range of business incentive programs. So, how do you establish a business in this state?

Why do companies prefer to register a business in Arkansas?

There are several pivotal influences that play a key role in attracting entrepreneurs to start a business in Arkansas. One of the key areas is the state’s thriving economy. Its Real Gross Domestic Product (GDP) is more than $140 billion, and that is an increase of 2.4% as compared to 2022. Today, the state is home to over 250,000 small businesses. It is also home to several Fortune 500 companies like Walmart, Tyson Foods, and Murphy USA. This is due to the several benefits offered by the state. If you want to start a small business in Arkansas, then here are some of the salient highlights:

• Low Cost of Doing Business – One of the aspects that holds prominence and importance is the overall business climate. The state of Arkansas has one of the lowest costs for conducting business in the nation, and this provides the pro-business environment that every entrepreneur prefers.
• Tax Incentive Programs – If you start a business in Arkansas, then in all probability, you will need to file different types of state and business taxes. The state also provides a wide variety of small business incentive plans that include tax exemptions, income tax credits, and reductions. This helps in lowering the overall tax burden.

Thinking of how to start your company in Arkansas?

Steps to start a business in Arkansas

Forming a new business and making it operational constitutes several processes. Certain state and business compliances need to be fulfilled. Hence, it is essential to maintain an Arkansas business checklist for reference. Let’s examine all the key processes critical to the formation and operation of your company.

1. Prepare Arkansas Business Plan

Whether you are planning to start a business in Arkansas or relocating an existing company, a clear strategy is crucial for making it sustainable. This is where a business plan comes into play. It is also referred to as a strategic plan and plays a key role in the inception, growth, and overall success of a new business. There is no ‘one plan fits all, but the components for each plan may be the same. The plan should not only focus on the near and future goals of the company, but also on market opportunities and expansion options. A good business plan will include the following components:

• Executive summary
• Business Description
• Market analysis and strategy
• Products and services
• Marketing and sales plan
• Management and organization description
• Competitive analysis
• Operating plan
• Financial projection

2. Attend Entrepreneurial Training or Development Programs in Arkansas

There are numerous components, preparations, and processes that contribute to launching a business successfully. It’s essentially every entrepreneur’s dream! At the same time, it is essential for every entrepreneur to identify the right business opportunities and markets, take calculated risks, and invest in research and innovation to pursue value creation. This becomes easier when you attend entrepreneurial training or development programs in Arkansas. You can attend such programs before or after you incorporate in Arkansas.

3. Choose Business Structure for Arkansas Business

If you are planning to register a business in Arkansas, then there is one major aspect to consider. This aspect is of choosing the right business structure. The structure chosen by you will impact different areas of business operations and sustainability, like taxation, legal liability, financing and investment, and operational flexibility, among others. Each entity structure has its own advantages and disadvantages. Some of the entity structures, domestic and foreign, that you can form in Arkansas are:

• Limited Liability Company
• Series Limited Liability Company
• Corporation
• S Corporation
• Limited partnership
• Limited liability partnership (LLP)
• Limited Liability Limited Partnership
• Sole Proprietorship
• Partnership
• General Partnership
• Nonprofit Corporation
• Benefit Corporation

4. Naming Your Arkansas Business

A business name is considered a brand identifier and is, therefore, absolutely necessary. You will not be able to register any company without a name. A business name also impacts customer perception, provides legal protection, and creates market differentiation. You will need to reserve a business name with the Arkansas Secretary of State’s office to make it the official legal name. Once reserved or registered, it can be used to obtain licenses and permits, as well as open a bank account. There are certain aspects to consider when naming your company, like:

• It is essential to adhere to the state’s naming requirements and guidelines. These are governed by the Arkansas Code of 1987 (2024).
• Your company name should be distinguishable from the name of any other company in Arkansas.
• You cannot use restricted words in the company name like “bank”, “banking”, “deposit”, or “Trust Company”.
• You should not use words that sound similar to the names of government agencies.
• Once you have chosen a name, it is time to conduct a Business Entity Name Search, also known as a name availability search.
• It is important to reserve the name before you register a business in Arkansas
• You will need to file the Application for Reservation of Entity Name, depending on the legal structure chosen.
• If you don’t want to use your legal name, then you will need to register a fictitious name, also known as a DBA (Doing Business As) name.

5. Choose Your Location for an Arkansas Business

Several important elements drive business success, and one such element is location. Several factors come into play when choosing a location. Whether you want to start a small business in Arkansas or form a large corporation, here are some key factors to consider:

• Type of business activity – It is important to focus on the business activity while choosing your location, as it will help in maximizing benefits. If you start a business in Arkansas and concentrate on specific industries, then the best location would be an industrial park. A good example is the 1,000-acre Mulberry Industrial Park.
• Ease of Access – One of the key components that drives businesses is ease of access. Choose a location that is easily accessible to your prospective customers. At the same time, the location should have a robust transportation and logistics infrastructure.
• Zoning Ordinances – It is always beneficial to check local zoning regulations before you incorporate in Arkansas. These outline places where certain businesses can or cannot operate. Some places may even require you to apply for clearances, permits, and licenses.
• Market Demand and Opportunities – There are some markets that are good for manufacturing, while others are good for retail. Hence, it is essential to select a location that offers your business growth opportunities.

6. Register Your Arkansas Business

Once you have reserved your business name, the next important step is to register a business in Arkansas. You will need to submit documentation according to the chosen entity structure. The documents have to be filed with the office of the Arkansas Secretary of State. Let’s examine an example to better understand this concept.

Do you want to form a new business in Arkansas?

7. Get Your EIN

Most forms of new businesses require a federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The question is whether your business requires the same or not. The requirement depends on the entity’s structure and several other factors. So, if you were to start a business in Arkansas and hire employees, or if you withheld taxes on income, then you will need to obtain an employer identification number (EIN). It is important to note that if you don’t have an EIN, then you will not be able to pay taxes and, in some cases, open a business bank account.

8. Open a Business Bank Account for Arkansas Business

One of the most important aspects of your Arkansas business checklist is the financial side of your company. When we talk of finances, the obvious area of focus is banking. It is extremely crucial that you find the right business banking solution. Operating certain entity structures like a limited liability company (LLC) or a C corporation comes with their specific legal obligations, and hence, maintaining a separate business bank account becomes necessary. This type of business banking solution also helps in maintaining the “corporate veil,” thus protecting your personal assets from any type of business liability.

9. Obtain Business License and Permits

Once you have made a decision to register a business in Arkansas, you will be required to ensure compliance with all state requirements. One such important requisite is obtaining the necessary business licenses and permits. Unlike many other states, Arkansas doesn’t have the requirement of a generic business license at the state level. However, certain businesses may need to obtain a statewide permit or license based on their primary activity. So, let’s take a look at the licensing requirements in this state. They can be classified as:

• Arkansas sales tax permit – If you start a small business in Arkansas and the primary business activity is to provide goods and services subject to sales tax, then you may need to apply for a sales tax permit or license. In other words, you need to meet the economic nexus requirements to qualify for this license. The Arkansas Department of Finance and Administration is responsible for the issuance of this permit.
• Professional or Occupational License – If you start a business in Arkansas, then business licenses are necessary. Some of the permits or licenses in this state may depend on a specific profession or occupation that you are practicing. This type of licensing is governed by the Arkansas Code of 1987 (2024), Title 17 – Professions, Occupations, and Businesses. The issuing authority for these types of licenses varies according to the profession or occupation. If you are a professional engineer and your firm provides engineering-related services, then you will need to apply for a professional engineer license (PE license). The Arkansas State Board of Licensure will issue this for Professional Engineers & Professional Surveyors.
• Local licenses – Once you register an Arkansas business online, you may be required to apply for local licenses. These are also known as city or county licenses and are issued by the business license department of a specific city or the office of the county clerk. Your business must have a physical address in a city or county to be eligible for this license. You may also be required to ensure that your company’s activities comply with local zoning ordinances. Some cities, like the City of Blytheville, may require you to obtain a Business Privilege License.

10. Register for Taxes

Once you register a business in Arkansas, there are different forms of annual compliance that you will need to fulfill. One of the key areas of focus should be the different types of taxes that may be levied on your entity. The taxes to be filed will vary depending on the type of entity and its business activity. You may have to file multiple taxes, while some taxes may not be levied on your entity at all. In order to file your taxes seamlessly, you will need to register for a Tax Account with the Arkansas Department of Finance and Administration. This is also known as the Arkansas Taxpayer Access Point (ATAP).

11. Obtain Business Insurance

Accidents can happen anytime and anywhere, and this includes your business premises. It is almost impossible to predict an accident or a natural calamity, and hence, damages may be unpreventable. This is where you can protect your business from various risks by investing in business insurance. This is a crucial detail for any Arkansas business checklist and will help you save both time and money. The different forms of business insurance that you can choose from are:

• General liability insurance
• Product liability insurance
• Business Owner’s Policy (BOP)
• Data Breach Insurance
• Business Income Coverage
• Professional liability insurance
• Workers’ compensation insurance
• Home-based business insurance
• Commercial Property Insurance
• Commercial Umbrella Insurance

12. Annual and Ongoing Requirements

Once you start a business in Arkansas, you will have to be compliant with the state’s annual requirements. This will ensure your company enjoys a good standing in the state. One of the fundamental annual requirements is the annual report. This is required by both new and existing businesses in most states in the United States. In Arkansas, however, this is also known as the Arkansas Franchise Tax Report. A Limited Liability Company and corporations are required to submit it to the Arkansas Secretary of State’s Business and Commercial Services Division (BCS) along with a filing fee. A top Arkansas registered agent can assist you with filing this report.

Some Important Quick Resources for an Arkansas Business

Whether you plan to start a small business in Arkansas or simply relocate your LLC or corporation, you should have ready access to essential information and other important resources. This will enable better and right decision-making related to new company formation and operation. Let’s examine some of the key resources.

Arkansas Secretary of State

The office of the Arkansas Secretary of State comprises several divisions and is responsible for publishing the state’s administrative regulations. The most important of these is the Business & Commercial Services Division. They are responsible for registering business entities, collecting state franchise tax, and filing liens pursuant to the Uniform Commercial Code. You can download various types of business forms and submit them online. You can also find information pertaining to annual reports for domestic and foreign entities.

• Arkansas Secretary of State
  State Capitol
  500 Woodlane Avenue, Suite 256
  Little Rock, AR 72201
  Phone – 501-682-3409
  Email – [email protected]
  Website – https://www.sos.arkansas.gov/

Arkansas Taxation Departments

The primary Arkansas taxation department is known as the Department of Finance and Administration. As the name suggests, this department provides information, assistance, and resources related to individual and business taxes in this state. Once you register a business in Arkansas, you will be able to download various tax forms from their website. You will also find valuable information about various grant programs. You can review their comprehensive suite of services, which focuses on key processes associated with fulfilling licensing requirements, managing tax obligations, and financial reporting.

• Arkansas Taxation Departments
  Secretary’s Office
  DFA Building
  1509 W 7th St, Rm 401
  Little Rock, AR 72201
  Phone – 501-682-5323
  Email – [email protected]
  Website – https://www.dfa.arkansas.gov/income-tax/

Arkansas Labor and Employment Departments

The primary objective of the Arkansas Labor and Employment Departments is to work towards fostering, promoting, and developing the safety, health, and welfare of the businesses and employees in this state. They provide a wide variety of information and resources on areas such as Code Enforcement, Labor Standards, Occupational Safety and Health, and Safety and Health Brochures. They also provide an Arkansas business checklist related to professional and occupational licensing.

• Arkansas Labor and Employment Departments
  900 W Capitol Ave, Ste 400
  Little Rock, AR 72201
  Phone – 501-682-4500
  Email – [email protected]
  Website – http://www.labor.arkansas.gov/

Arkansas Economic Development Commission

If you are planning to start a business in Arkansas, then you may find important resources with the Arkansas Economic Development Commission for developing and diversifying your company. Whether you are searching for an industrial area or location or building or require information pertaining to Business Finance, this is where you will find relevant resources. Some of the areas of focus include leadership building, business finance and incentives, business development, manufacturing solutions, and strategic initiatives.

• Arkansas Economic Development Commission
  1 Commerce Way, Ste. 601
  Little Rock, AR 72202
  Phone – 501-682-5996
  Email – [email protected]
  Website – http://www.arkansasedc.com/about-us

Arkansas Small Business and Technology Development Center (ASBTDC)

The Arkansas Small Business and Technology Development Center has a network of offices specializing in providing one-on-one consulting. They also provide consultation and resources on how to incorporate in Arkansas and ways to expand your expertise through participation in events. They also have a Build Your Own Business (BYOB) initiative to help you fulfill your entrepreneurial requirements.

• Arkansas Small Business and Technology Development Center (ASBTDC)
  2801 S. University Ave..,
  Little Rock, AR 72204
  Phone – 501-916-3700
  Email – [email protected]
  Website – https://web.saumag.edu/business/asbtdc/

Ready to Start a Business in Arkansas

There are many reasons why entrepreneurs prefer to register a business in Arkansas, and one of the most important is purely economic. Along with low cost of living and low property taxes, the state provides a stable environment for businesses to grow and expand. If you are planning to establish a startup in this state, then IncParadise, a reputable Arkansas registered agent service, can assist you with the entire process.