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Advantages of Incorporating a Business in Arkansas
What makes Arkansas a great place to start your business? A state that is known for its infrastructure and transport, the overall business environment is supported by a range of incentives and grant programs. As a result of these incentives and grand programs, whether you are an LLC startup company in Arkansas or a corporation, the path to business freedom and flexibility is guaranteed!
Business Growth Incentive for New Businesses
As one of the top registered agents in the state, we can help you register a new business in Arkansas and this is so that your business entity can capitalize on the several benefits, incentives, and advantages the state has to offer. These will ensure long term growth and profitability for corporations, LLCs, partnerships etc. Let’s take a quick look at what makes Arkansas a good business destination:
Advantage#1: Salient benefits of Corporation or LLC formation
Corporation
- Limited Liability: The shareholders in an Arkansas C Corporation will enjoy limited liability where the corporation’s debts are concerned. They will also be protected from any judgments made against the corporations.
- S Corporation status: At any given point in time, you can convert from a C Corporation to S Corporation status through a proper process. This election will enable a startup company in Arkansas to be taxed in a similar way as a partnership.
- Long life: When you register a new company in Arkansas as an S Corporation, one of the advantages is the independent life the corporation will enjoy. The corporation will continue operation even after the death of stockholders.
LLC
- Limited Liability: As an owner of an LLC, you will be able to enjoy limited liability protection similar to what a corporation enjoys.
- Flexible Profit Distribution: An LLC has the benefit of being able to select different forms of distribution of profits
- No Minutes of meetings: Unlike a corporation, an LLC startup company in Arkansas will not be required to maintain any minutes of the meetings or resolutions.
- Flow through Taxation: When you register a new company in Arkansas, an LLC can benefit from the process of flow through taxation that will ensure there are no double taxations.
Advantage#2: Tax Credits
If you register a new business in Arkansas, you will be able to benefit from a variety of tax credits applicable to your specific business. Some of them include:
- Advantage Arkansas: This is a type of “Income Tax Credit” program that provides a startup company in Arkansas with corporate income tax credits, new full-time jobs are created. The annual credit can be as much as 4% for new employee payroll and can be claimed for a period of 5 years. If your business has unused credits then they can be carried forward for a maximum period of 9 years.
- ArkPlus: This is also a type of “Income Tax Credit” program wherein the state corporate income tax credit is equal to 10% of the total investment made in an expansion project for a specific business. Your startup company in Arkansas will qualify only when it meets specific employee payroll and investment requirements. If your business has unused credits then they can be carried forward for a maximum period of 9 years.
- InvestArk: This is also a type of “Sales and Use Tax Credit” program where your startup company in Arkansas will qualify only if it has been operating from the state for a period of at least 2 years. This is a non-transferable and non-refundable tax credit, which is equal to 7% of all eligible project expenditures. If your business has unused credits then they can be carried forward for a maximum period of 9 years.
Several grants or loans, tax refunds, and tax exemption programs have also been created to ensure businesses can benefit from them. Apart from these, when you register a new business in Arkansas, you can take advantage of incentives offered by the county or city that you operate from.
Are there any Disadvantages of Incorporating in Arkansas?
Wondering whether there are any challenges that you will encounter when you register a new company in Arkansas? There are a few and the most prominent amongst them is the “franchise tax”, which is a little on the higher side. Limited Liability Companies and Corporations have to pay franchise tax annually in accordance to Arkansas Code 26-54-104. With the exception of franchise tax, the state of Arkansas offers several advantages to businesses in terms of strong economy, flexible business climate, and tax incentives.