- Arkansas offers low corporate income tax rates (5.3%) and various growth opportunities, making it an attractive state for forming a corporation.
- To form a corporation in Arkansas, you need to choose a unique business name, hire a registered agent, and complete and submit Articles of Incorporation.
- Incorporators, responsible for filing the Articles of Incorporation, must be 21 years or older, and directors should always be more than the shareholders.
- Corporate bylaws, containing information about the company's management structure and decision-making processes, must be drafted.
- An Employer Identification Number (EIN) is necessary for opening a bank account, hiring employees, filing taxes, and more.
- You must obtain mandatory licenses and permits to operate your business legally in Arkansas.
- The cost of incorporating a business in Arkansas includes a filing fee for Articles of Incorporation, franchise tax, registered agent fee, and business license fees.
- Maintaining an Arkansas corporation involves filing annual reports, corporate taxes, obtaining necessary licenses and permits, submitting financial statements, and complying with state rules and regulations.
Incorporating a business in Arkansas is one of the best decisions you can make as an entrepreneur. This state has a lot to offer entrepreneurs with unique business ideas.
One of the best advantages of starting a corporation in Alaska is the low corporate income tax. The current tax rate is 5.3%. It allows business owners to avoid stress regarding taxes. This way, they can focus entirely on growing the company.
Apart from low tax rates, you can find different ways to raise capital in Arkansas. Many investors are interested in providing funds to the businesses they think are worth it.
Arkansas is a developed state that offers numerous growth opportunities to newly formed corporations. For instance, you can get the best professionals to hire. They further help you enhance the company's performance. That is why entrepreneurs consider this state over others.
To incorporate a business in Arkansas, you must know the formation steps. We have curated this guide to help you with the entire procedure. So, let's discuss all the steps in detail.
Understanding Arkansas Corporation Formation
Registering a business in Arkansas has become convenient because of online services. Still, you should know some necessary legal requirements and steps.
- Name of the Arkansas Corporation
- Name, address, and contact information of the registered agent
- Objectives of the company
- Name, address, and contact information of incorporators and directors
- Number of listed shares
- Contact information of the corporation
Steps To Form A Corporation In Arkansas
Select A Name For Your Corporation
You need to choose the corporation's name according to the guidelines. Following them might help you think of a better name for your company. The name should be unique, easily pronounced, and related to your business. Otherwise, people won't remember it, even if your products or services are impressive.
Once you have selected the names, you should also check if the domain name is available. After that, you can secure your domain name.
Hire A Registered Agent
A registered agent is responsible for handling specific tasks related to the process. These professionals help businesses in receiving tax and other documents. Similar to naming the corporation, some guidelines are also crucial that assist in finding the right professional.
Complete And Submit Articles Of Incorporation
You must file the Articles Of Incorporation to register your business with the Arkansas Secretary Of State. It includes various details like name, objectives of the company, number of shares, registered agent, and more. You have to provide them with all the information and attract crucial documents.
Select Suitable Incorporators And Directors
Specifying incorporators and directors of the corporation is another crucial legal requirement to start a business. Their goals must align with the company to become a perfect fit.
Write Corporate Bylaws
Drafting corporate bylaws is also significant in the process. They help higher authorities learn about your company's management structure.
Bylaws must include all the information related to meetings, dispute management, governing, etc. You can draft them in a variety of ways.
Apply For Mandatory Licenses And Permits
You must prepare all the licenses and permits that are mandatory in Arkansas. Without them, you cannot run a business legally.
You can gain knowledge regarding the license and permits through professionals and some online resources.
Get An Employer Identification Number
An Employer Identification Number is another requirement for corporations in Arkansas. It helps businesses open a bank account, hire employees, apply for loans, pay taxes, and more. Applying for an EIN is straightforward because you can do it offline or online.
Naming And Registering Your Corporation
Naming your Arkansas corporation is a significant step in the process. But how can you do it correctly? Well, you have to follow specific guidelines to get started. Besides, you should also know the importance of selecting a unique and memorable name.
The name of your corporation must not be complex to pronounce. People always remember simple company names. Also, the name should reflect your business' products and services. This way, you can positively impact the customers' minds.
As the name needs to be unique, you must search for it on the Arkansas Secretary Of State database. If you find a similar one, consider selecting a different name.
The following guidelines might also assist you in deciding on a suitable business name-
- It should contain the terms like "corporation," "limited," or "company" or their abbreviated terms like "corp.", "inc.", "ltd."
- It should be different from other businesses in Arkansas.
- It should not contain terms like FBI, State Department, Treasury, or more because these reflect a government agency.
- It should not contain any terms that signify the company is created for illicit purposes.
- If you use terms like Bank, University, etc., you might need to complete some documentation. You can get information about it from a professional.
After selecting a name, you should secure your domain name for website purposes. You can easily find whether your domain name is similar to another one through online search.
Reserve your business name by submitting a Name Reservation Form to the Arkansas Secretary of State. This reservation allows businesses to reserve the name. So, other companies cannot use it. But it is only valid for only 120 days.
You can then select a registered agent, choose incorporates and directors, and file Articles of Incorporation with the Arkansas Secretary of State to register your corporation. The filing charge for Articles of Incorporation through the mail is $50, and through online services is $45.
Specifying A Registered Agent, Directors, And Incorporators
You need to choose a registered agent, directors, and incorporators. Here we will discuss them one by one.
A registered agent's primary responsibility is to receive the legal documents on behalf of the corporation. You have to provide the information about them while filing Articles of Incorporation. The professional should be-
- 18 years or older
- A resident of Arkansas and have a legal address
- Available during office hours
Incorporators are responsible for filing and submitting the Articles of Incorporation. Moreover, they also elect the directors by conducting meetings.
Corporations can choose only one individual for the process if they don't require more. A suitable incorporator should be 21 years or older. Just like a registered agent, you must have their name and address.
The incorporators elect the directors of a corporation in Arkansas. They manage the overall business operations. That is why they need to be extra professional while making decisions for the company. The following things are necessary to meet regarding them-
- The directors should always be more than the shareholders. You can choose two to three individuals.
- No law in Arkansas restricts the number of directors. It depends on your company's requirements.
- The directors can be residents or non-residents of Arkansas. There are no rules and regulations in the state about it.
Stating Corporate Purpose And Bylaws
The formation of a corporation in Arkansas is incomplete without stating the corporate purpose and bylaws. The corporate purpose mentions the goals and mission of the company. Therefore, it is a legal requirement to register a company in Arkansas.
A statement of purpose is crucial while filing the Articles of Incorporation with the Secretary of State. Otherwise, it might lead to rejection. Unfortunately, you have to begin the process again.
Apart from that, stating the corporate purpose also helps stakeholders understand the corporation better.
On the other hand, corporate bylaws are a set of internal laws of a corporation compiled in a document. It should contain-
- information about the company's rules and regulations
- management structure
- decision-making processes
- information about committees
- financial matters
- roles and responsibilities of shareholders, directors, and officers
- voting processes
- dispute resolution
- records management
When stating corporate bylaws, you need to consider some things. Here is how you can draft effective corporate bylaws-
- Determine the roles and responsibilities of the directors, officers, and shareholders
- Establish the procedure for conducting meetings in the company
- Develop the decision-making process regarding voting and other necessary tasks
- Create the procedure for appointing committee members
- Determine solutions for effective dispute resolution
- Specify the rights of shareholders
- Establish ways to handle financial matters
Obtaining An EIN And Business Licenses
An Employer Identification Number is required for various purposes. It includes opening a bank account, hiring employees, filing taxes, and more. You can apply through mail or the Internal Revenue Service website.
Besides EIN, you should also obtain specific licenses and permits to become a legal entity in Arkansas. These depend on the type of business you are running. You might need business licenses, sales tax permits, professional licenses, building permits, environmental permits, and occupational licenses.
You can follow these tips to find out the necessary ones-
- Conduct detailed research on finding the necessary permits and licenses according to your company
- Take help from professionals
- Get information about how to apply for licenses on reliable websites
- Research federal, state, and local licenses
Costs Of Incorporating In Arkansas
The cost of incorporating a business in Arkansas includes the following-
- The filing fee for Articles of Incorporation is $45 online and $50 through mail.
- The franchise tax report in Arkansas costs around $150.
- The overall fee of a registered agent varies according to location. But you can expect it to be $125 a year.
- The Sales and Use Tax permit costs $50 in Arkansas.
- The local business license fee is between $15 to $52, depending upon the type of business.
For further information, you can visit the Arkansas Secretary of State website.
Arkansas Corporate Taxation
The different types of corporate takes in Arkansas are-
- The income tax rate in 2023 is 5.3%. Earlier, it was 5.9%.
- The franchise tax for corporations in Arkansas is $150 a year.
- The sales and use tax in Arkansas is 6.5%.
- The property tax rate in Arkansas is 0.57%.
- The rate of withholding tax is 4.9%.
How to file taxes in Arkansas-
- You need to have an Employer Identification Number issued by the IRS. Using it, you can register with the Arkansas Secretary of State and the Arkansas Department of Finance And Administration.
- You need to identify the filing requirements.
- You need to calculate the taxes according to the rate.
- The deadline for filing taxes is 15th April on an annual basis. You can make the payment electronically or by mail.
- You need to prepare proper tax records for future purposes.
Maintaining Your Arkansas Corporation
The ongoing obligations of owning a corporation in Arkansas are as follows-
- Filing of the annual report on 1st May every year with the Arkansas Secretary of State
- Filing of corporate taxes
- Obtaining necessary licenses and permits
- Submitting annual financial statements with the Arkansas Secretary of State
- Compliance with state rules and regulations
You can maintain your company's compliance by hiring a compliance officer, getting information about updated laws, filing reports on time, conducting regular audits, and getting professional advice from a registered agent.
The benefits of using a registered agent for ongoing compliance are-
- They have more knowledge regarding the laws. As rules change, they always stay updated with the latest ones.
- A registered agent provides enough privacy regarding a company's internal information. So you can trust them.
- These professionals offer helpful guidance to the companies for successful compliance with laws. Their legal advice is always beneficial for the newly built corporation.
Why Should You Form A Corporation In Arkansas?
You should form a corporation in Arkansas because it has various benefits, such as tax savings, professional employees, growth opportunities, and more.
How Much Does It Cost To Register A Corporation In Arkansas?
The cost of registering a corporation in Arkansas online is $45, and through the mail is $50.
Is Employer Identification Number Important For A Corporation In Arkansas?
Yes, Employer Identification Number is important for hiring employees, paying taxes, and opening a bank account.
What Is The Corporate Income Tax Rate In Arkansas?
The corporate income tax rate in Arkansas is 5.3%.
Every state has a different requirement regarding the process of forming a corporation. You must be familiar with the necessary legal requirements, documents, and formation steps to have a successful process.
To register a corporation in Arkansas, you must consider the above information to have a smooth experience. Additionally, you can prevent common risks and mistakes that startup owners usually experience if you learn everything early.
We hope you can quickly begin and complete the procedure without any complexities.
Learn more with us
- How To Form A Corporation In Alabama
- How To Form A Corporation In Alaska
- How To Form A Corporation In Arizona
- How To Form A Corporation In Illinois
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