- Starting a business in Arkansas may be fun and profitable if you're willing to put in the work.
- It takes a lot of work and money to get a business off the ground in Arkansas. Before you make any quick decisions, find out if there is a market for what you have to offer in Arkansas.
- A business plan outlining your company's growth from infancy to mega-success is necessary if you want to attract investors who can finance your expansion.
- If you would rather not invest in your business, you have alternative options. The legal structure you choose for your company will have a significant impact on its development.
Arkansas may be home to a multinational corporation, but it's also a great place for start-ups. The state is home to 247,000 small businesses that collectively employ about half of the state's workers. Starting a business in Arkansas appeals to ambitious individuals for a variety of reasons. Arkansas, for one, has among the lowest property expenses in the country, making it an attractive option for businesses looking for a low-cost place to set up shop.
As an added bonus, small companies will find a supportive environment in Arkansas, as the state government offers a variety of services, such as business aid centers and tax incentives, to ease the financial strain of getting started. These resources are complemented by an abundance of networking opportunities, as there are numerous chambers of commerce and trade associations that serve to provide support to entrepreneurs.
What Steps Are Involved In Starting A Business In Arkansas?
1. Define The Idea Behind Your Business
It's been proven time and time again that the foundation of each thriving business is a novel and marketable idea. Regardless of the nature of the company you hope to launch in Arkansas, you must first choose the niche or specialization into which you intend to fit. Make sure that the company concept you decide to explore is one that works well with your own areas of expertise, hobbies, and interests. Much effort goes into starting a business, and a big part of your success will depend on how enthusiastic and motivated you are to remain throughout the process. Taking the time to come up with the idea that genuinely interests you and speaks to your strengths will ensure that your passion remains intact throughout the process, increasing the chances of success
2. Put Together A Business Strategy
Having a well-thought-out business plan in place will help you realize your long-term objectives and establish your company's viability. In a nutshell, your company's strategy is the road map to success. One way to think of a business plan is as a blueprint that lays out all the specifics of your business in advance so that you may be better prepared for the various obstacles that will inevitably arise. Your business plan should include an overview of your current and future goals, a competitive analysis to determine where you stand in the market, a SWOT analysis to assess your strengths, weaknesses, opportunities, and threats, as well as marketing strategies
3. Decide On A Company Name
Choosing a name for your company is the next logical step. Pick a name that stands out from the competition, conveys what you're selling without being confusing, and is simple to say. No two companies can have the same or "confusingly similar" names in the state of Arkansas. Be sure to check the availability of the company name with the Arkansas Secretary of State before submitting any paperwork. If the name you want to use is already taken, write down a few backups. A business name reservation can be filed with the state if the desired name is available and the company still needs to be ready to register with the state. All of our company formation bundles include a name check for your new venture. The availability of your proposed company name is validated with the state on your behalf. The name reservation allows the company to reserve a business name for up to 120 days without having to incorporate it formally.
4. Fund Your Start-Up Costs
Naturally, you'll need some funding to get your company off the ground. It is crucial to figure out start-up expenditures in advance since this will determine the legal form you pick for your organization. You can have access to more funds from the following sources:
- External investments: Obtaining financing from outside sources, such as venture capitalists or entrepreneurs, typically requires giving up some control of your company in exchange for the infusion of cash. Forming a company is a sensible option to explore if this is the type of fundraising you have in mind.
- Loans for small businesses: A small business loan is available from many banks and other lending institutions. It goes without saying that you'll have to pay interest on this borrowed sum, so factor that into your budget as well. Take your time in crafting a business plan since it will likely be presented to the lender before any loan is approved.
- A close circle of loved ones: Getting a loan from a friend or family member might be a terrific, low-cost option for financing your business. These loans can either supplement or replace more conventional bank financing. Get the repayment conditions in writing before accepting any loans, and only take out what you can afford to pay back promptly.
- Bootstrapping: The term "bootstrapping" refers to the practice of using one's own funds and first business revenues to cover a company's initial expenditures. Self-funding might be a good option if your firm's initial expenses are low enough. This is because you would own and operate the business without any outside interference. One potential drawback of this financing option is that it might result in tremendous financial hardship right off the bat.
5. Choose A Business Structure
When you incorporate your company in Arkansas, you officially establish a boundary between yourself and your business. This disconnection shields you from personal responsibility in the case of corporate claims, a feature known as "limited liability protection." Establishing a legal framework for your company sends a message of stability and trust to investors and consumers, laying the groundwork for future growth and success.
Sole Proprietorship: A sole proprietorship is an unofficial organization in which a single person acts as both owner and manager of a firm that is not formally registered with the government. The most manageable business structure to maintain is a sole proprietorship, in which the firm owner is also the tax collector. When a business is owned and operated by a single person, that individual is personally responsible for all business obligations and litigation. Though it has its uses, running a business in Arkansas as a sole proprietor is only recommended if you meet specific requirements.
Limited Liability Company (LLC): Most entrepreneurs who start their businesses opt to form a limited liability company. It combines the liability shield of a corporation with the ease and adaptability of pass-through taxes, making it a "hybrid entity." LLCs are popular among sole proprietors and other low-volume businesses because they are low-maintenance and involve few if any, corporate formalities. As a result, there will be fewer yearly obligations and less paperwork to maintain, allowing you more time to concentrate on running your firm.
Corporation: If you're seeking a more formal corporate structure for your firm, a C corporation (sometimes known as a "general, for-profit corporation") is the best option. Corporations are quite common for firms seeking funding from outside sources since the sale of stock makes them more appealing to potential investors like entrepreneurs and VCs. A corporation's tax structure allows for the deductibility of employee health and dental insurance, which can amount to significant annual savings for a company.
Non-profit: A non-profit company is a type of organization whose primary mission is to promote social change or to lobby on behalf of a particular political or ideological position. Non-profit organizations do not distribute their earnings to shareholders but instead, reinvest them to further their mission. Donations are the primary source of revenue for most non-profit organizations. Non-profit organizations are unique in a number of ways, and one is that they can apply for and get tax-exempt status.
DBA (Doing Business As): The process of registering a business name as a DBA is formal. A "fictitious business name" (FBN) or "assumed name" (AN) is the legal term for this in various countries. To lawfully do business under a name other than your own, you may need to file a DBA with your state. Doing business in Arkansas under a name other than your own requires filing and registering a DBA. This includes but is not limited to conducting transactions, marketing, advertising, or printing business cards.
6. Register Your Business With The Arkansas Secretary of State
After deciding on a suitable business structure, the next step is to register your company with the Arkansas Secretary of State. There is always the risk of making a mistake while submitting papers to the state, but with My Corporation's help, you can rest assured that everything will be done correctly. The steps required to register a business in Arkansas vary slightly depending on the type of business you run. You will still be required to submit identical standard bits of data about your company, such as the name and contact details of a registered agent.
- Address, objective, and ownership information are all fundamentals of every firm.
- The business name: your first choice and some backups in case it turns out to be taken (recommended).
- Specifics about the registered agent: Name and contact information for the designated business liaison with the Arkansas Secretary of State. This is an Arkansas address only.
7. Acquire Required Licenses And Permissions For Your Company
Every company operating inside the state of Arkansas must first apply for a standard business license (sometimes referred to as a business tax certificate). As such, the conditions for obtaining a business license in every given city in Arkansas will be unique to that particular location. You will need to submit an application for a business license in each municipality where you want to conduct business. In addition to registering your business with the state, you may need to get local or state permissions as well. Either contact the regional government offices in the area where your firm will be operating or use the resources provided by My Corporation's business license compliance package to learn more about the specific licenses that apply to your enterprise.
8. Get Your Company's Finances In Order By Opening A Bank Account
Maintaining the legal protections afforded by incorporating your firm requires keeping business and private funds entirely separate. The most efficient method for doing this is opening a business bank account. If you run your business out of your home in Arkansas, it's a bad idea to have any of your personal assets (such as your house, vehicle, or other expensive possessions) tied to the company. Having a separate bank account for your company helps establish legal ownership over financial assets. An EIN (Employer Identification Number) is usually required when opening a business bank account. The Internal Revenue Service (IRS) will issue your company a nine-digit number known as an employer identification number (EIN) or federal tax ID. Wait until the LLC has been authorized by the Arkansas Secretary of State before requesting an EIN. Getting an EIN should be left until very late in the process of starting a firm.
While there are certain limitations to operating a business in the Natural State, Arkansas provides new ventures with much leeway in terms of how they're organized. There is much freedom in terms of the initial investment, insurance, and licensing that are needed to get started. Entrepreneurs who wish to contribute to Arkansas's economy have a lot of opportunities available to them, thanks to the state's thriving small business environment. With its low taxes, ample resources, and numerous business incentives, Arkansas is an ideal place for new businesses to start up.
Learn more with us
- How do I start a business in Nevada?
- How do I start a business in Iowa?
- How do I start an LLC in Colorado?
- How do I start an LLC in New York?
Access our Guides.
We can help!
At levy, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most — your business.
We can help you streamline operational processes for your business and save up on time in the long run. Learn more.
Like our content?
Subscribe to our blog to stay updated on new posts. Our blog covers advice, inspiration, and practical guides for early-stage founders to navigate through their start-up journeys.
Note: Our content is for general information purposes only. Levy does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.