How to Register a Corporation in Arkansas?

Arkansas Corporation

There are different types of businesses that you can form in Arkansas. One of the most popular entity types is a traditional corporation, also known as a C Corporation. This type of entity has several advantages compared to other types of entity structures. This is one of the primary reasons driving entrepreneurs to form a corporation in Arkansas. Once you have incorporated your company, you can elect S Corporation status, a special tax status that allows you to enjoy several tax benefits. There is a process in this state for incorporation, and it is governed by the Arkansas Code of 1987 (2024). You can choose to form a domestic or a foreign entity, and even register an Arkansas Corporation online or offline.

What is an Arkansas Corporation?

A C corporation (C corp) is a type of legal entity that is distinct from its owners, also known as shareholders. Such entities are typically subject to corporate income tax, although the tax rate varies from one state to another. If you register a corporation in Arkansas, it becomes a separate legal entity, allowing the corporation to own assets and enter into business contracts. Several aspects are mandatory in this type of entity, such as holding at least one annual meeting of directors and shareholders. There are also several benefits to incorporating in Arkansas, including access to grants and easier fundraising through equity financing. The most common forms of corporations that you can form in this state are:

• Business Corporations (C-Corp)
• S-Corporation
• Foreign Corporations
• Nonprofit Corporations
• Professional Corporations
• Benefit Corporation

What are the benefits of incorporating in Arkansas?

If you are an entrepreneur planning to incorporate in Arkansas, this type of business structure can provide you with advantages compared to other entity structures. Some of the top advantages are:

• Limited liability protection – A C Corporation is a separate legal entity, and hence, shareholders or owners enjoy limited liability protection. This is one of the biggest benefits of incorporating in Arkansas. This means that the owners or shareholders will not be personally liable for any debts or obligations of the corporation. This type of protection can prove highly beneficial in the event the company faces financial difficulties or lawsuits.
• Ability to offer shares – This type of legal entity can issue shares of stock. It can issue both common and preferred shares to raise capital and establish ownership stakes. These shares also represent ownership (shareholders) in a corporation. This is one of the reasons why forming a C-corp is always an attractive option.
• Perpetual Existence – One of the benefits of incorporating in Arkansas is that your company will enjoy perpetual existence. This means that a corporation can continue to operate indefinitely, even if its shareholders die or ownership changes hands. This type of entity will remain operational till it is formally dissolved.

Starting an Arkansas Corporation

If you plan to form a corporation in Arkansas, there are several essential steps to follow and state requirements to fulfill. Some of these requirements are one-time, while some are recurring. This will help your corporation operate smoothly.

1. Name an Arkansas Corporation

The first step in forming a corporation in Arkansas begins with reserving a business name. The corporate name must be chosen in accordance with the Arkansas Code of 1987 (2024) for Corporations and Associations. Let’s examine the key steps in this process.

• The name of your company must include a word, phrase, or abbreviation like “company,” “corporation,” “limited,” “incorporated,” “co.,” “corp.,” “ltd.,” or “inc.” pursuant to AR Code § 4-27-401 (2024).
• You must ensure that the corporate name is distinguishable in the records of the Secretary of State from any other corporate name, fictitious name adopted by a foreign corporation, and business names of not-for-profit corporations.
• The chosen business name should not contain any word or phrase that implies or indicates that the said corporation is connected with a government agency anywhere in the United States.
• You need to conduct a corporate name search, also known as a name availability search, with the Secretary of State’s office (SOS).
• If the chosen corporate name is available, then you can file an Application for Reservation of Entity Name (form RN-06).
• You will need to submit this form along with a fee of $25 to reserve the chosen name.

2. Appoint Directors

One of the important actions to take before or after registering a corporation in Arkansas is appointing directors. According to the Arkansas Code of 1987 (2024), AR Code § 4-33-801 (2024), each corporation operating in this state must appoint a board of directors. The term of such directors must be specified in the articles or bylaws of the corporation. Hence, appointing a board of directors is a key aspect of the incorporation process.

3. Appoint an Arkansas-registered agent

Every state has some general business laws and some specific laws for certain entity structures. If you want to incorporate in Arkansas, then the Arkansas Code of 1987 (2024) states that no corporation can operate in this state without a registered agent. A registered agent is considered a business or individual responsible for receiving legal documents and official communications on behalf of a corporation. They are also known as statutory agents, and their prime responsibility is to provide service of process.

4. File Articles of Incorporation with the Arkansas Secretary of State

This is the most important step in forming a corporation in Arkansas. Once you have reserved a corporate name, you will be able to apply for incorporation. You will be required to prepare and submit the Articles of Incorporation pursuant to AR Code § 4-27-202 (2024). This must be filed with the Arkansas Secretary of State, along with a filing fee of $50.

Are you thinking of starting an Arkansas Corporation?

5. Prepare bylaws for the Arkansas Corporation

Bylaws for an Arkansas Corporation are fundamental documents that provide a clear roadmap to the company. This document must be carefully thought out and created, taking into account both the current and future needs of the company. Although bylaws are as important to a corporation as its articles, this type of document is not required to be submitted to the Arkansas Secretary of State. You can prepare this document before or after you register an Arkansas Corporation online.

• Introduction and establishment
• Composition of the board of directors
• Key officers of the corporation
• Information pertaining to shareholder meetings
• Information on various stocks a corporation can issue
• Details of any committees, like the audit committee, etc.
• Conflict of interest
• Procedure for the amendment of the company bylaws
• Other miscellaneous provisions, including rules and procedures

6. Draft shareholder agreement and issue shares

One of the key areas to focus on after you register a corporation in Arkansas is a shareholders’ agreement. This type of agreement is also known as a stockholders’ agreement. It is considered an arrangement among shareholders and is quite similar to any other legally binding contract. This type of agreement sets out terms that essentially cover the following:

• How a corporation should be operated
• Shareholders’ rights and obligations
• Information on the management
• Privileges and protection of shareholders
• Capitalization tables
• Share Issuance and defining different classes of shares, if applicable
• Share transfers and exit strategies
• Decision-making and dispute resolution

• Deciding the amount of capital that a corporation needs to raise through shares
• The number of shares that you can issue may vary from one state to another
• You may be required to register with the Securities and Exchange Commission (SEC)
• Setting the value for each share being issued
• Choosing the type of stock to be issued

7. Get an EIN

When you incorporate in Arkansas, there are several state requirements to be fulfilled. One of the most important annual requirements is that of filing taxes. As a corporation, filing taxes will be possible only if you have obtained an Employer Identification Number (EIN). This is a unique nine-digit number assigned to a corporation by the Internal Revenue Service (IRS).

8. Get a business license and permits

Now that you know how to form a corporation in Arkansas, it is essential to understand what it takes to make your company operational. The foremost requirement is obtaining the necessary business licenses and permits. Your company may need a single license or multiple licenses and permits. The type and number of licenses required are determined by several factors, including the primary business activity, the company’s location, and the profession or occupation. The business licenses your company may need in this state are categorized as follows:

• • Sales tax permit – This is mandatory if you are selling services, goods, or property in this state.
  • Profession or Occupation License – Your company may require this according to the profession that the corporation specializes in, such as real estate or accounting.
  • Local licenses and permits – Each city or county in Arkansas has its local municipal codes or zoning codes. Licenses, permits, and their fee will vary according to the jurisdiction. They will be issued by the office of the County Clerk or the business license department of the city in which your company operates.

9. Open a bank account

Once you form a corporation in Arkansas, using a personal banking account for your business can be a disadvantage. This is particularly problematic as it will create confusion during tax time, as individual and business expenses and gains will be mixed. At the same time, corporations are required by law to operate a business bank account. Before opening such an account, it is essential to research what each bank or financial institution has to offer and how its services can benefit you. For example, if you have several retail outlets, then you need to check if your preferred bank enables a POS or “Point of Sale” transaction.

10. Comply with other tax and regulatory requirements

Once you register an Arkansas Corporation online, there are two very important annual requirements that every corporation in the state needs to fulfill. They are filing annual reports and taxes. A corporation must file an annual report with the Arkansas Secretary of State’s Business and Commercial Services Division (BCS). This must be filed annually by May 1, pursuant to AR Code § 4-27-1622. A corporation must also file a franchise tax, in addition to the annual report.

Know more about starting an Arkansas Corporation

You may have several queries regarding how to form a corporation in Arkansas and operate it successfully. This section has been created to answer several such queries and those related to forming an S Corporation, startup costs, dissolution, and foreign corporations among others.

How do I form a “C” corporation and an “S” corporation in Arkansas?

You can form a C Corporation in Arkansas by filing the Articles of Incorporation pursuant to AR Code § 4-27-202 (2024). Once you register a corporation in Arkansas, you can elect S Corporation status. An S Corp is basically a tax designation. According to the IRS, to elect S Corp designation, your company must have no more than 100 shareholders and only one class of stock. You will be required to submit a completed Form 2553 (Election by a Small Business Corporation). It is essential to note that you should file this form only after you have received your Employer Identification Number (EIN).

What is the cost to start a corporation in Arkansas?

If you want to register an Arkansas Corporation online, then you will be required to submit Articles of Incorporation for a domestic entity. The initial cost to incorporate is $50 for a paper submission and $45 for an online submission. You will also be required to file an Application for Reservation of a Corporate Name along with a fee of $25. Apart from this initial incorporation cost, there will be other costs related to the Certificate of Amendment, as well as applications for business licenses and permits, among others.

How do I look up a corporation in Arkansas?

If you plan to incorporate in Arkansas, you must first reserve your corporate name. Once you have identified a business name, you will need to conduct a business entity search or a name availability search. You need to ensure the name is compliant with the Arkansas Code of 1987 (as amended through 2024). A corporate name can be reserved for a period of 120 days. The name availability search will reveal whether your chosen name is available for reservation or not.

Do I need a business license for my Arkansas Corporation?

Yes. You may require single or multiple business licenses depending on the business activity, profession, regulated industries, and the location of your company.

Can I register a foreign corporation in Arkansas?

Yes. You will need to apply for the process to obtain a foreign qualification to operate your business in this state. You will need to submit an Application for Certificate of Authority pursuant to the provisions of the Act 958 of 1987 and Arkansas Code Annotated § 4-27-1503. There is a filing fee of $300. You will also be required to attach a Certificate of Existence from the home state.

How do I dissolve a corporation in Arkansas?

Suppose you want to dissolve your corporation at any given point in time. In that case, you will need to submit Articles of Dissolution (Form DN-10) pursuant to the Act 958 of 1987 & Arkansas Code Annotated § 4-27-140. The filing fee for a paper form is $50, while the cost for filing online is $45. Three types of dissolution can occur in this state: voluntary, administrative, and judicial dissolution.

Ready to Start an Arkansas Corporation?

There are different types of business structures that you can opt to register in this state. One of the most common structures is that of a corporation. This is because there are several benefits of incorporating in Arkansas. If you want to form a corporation in Arkansas, then IncParadise can assist you with the process of registering or moving your company to this state.