Are you looking to form a corporation in Arkansas, but you’re not familiar with the formation process? There are quite a few important steps you’ll need to take to create your Arkansas corporation and maintain it, so this guide will outline the rules and regulations involved with this process.
To get started, please reference our 11-step guide below or hire a professional business incorporation service.
Guru Tip: To see how some of the top online incorporation services stack up, here are two of our most popular comparisons.
1) Choose a Name
One of the most important aspects of the incorporation process is naming your business. There are three major elements to consider when choosing a name:
When naming a corporation in the state of Arkansas, you will need to include one of the following words or abbreviations: incorporated, corporation, limited, company, Inc., Corp., Ltd., or Co. Your corporation’s name also cannot include any words or abbreviations that indicate other business types, like the phrase “limited liability company” or the initials “LLC.” You also are not allowed to include words that refer to certain types of businesses (like “bank” or “law office”) unless your business fits those descriptions.
In addition to the legal considerations, you might want to identify your line of business or your mission in your company name. For example, you can display any closely held values in your name, like using the word “green” for environmentally friendly businesses.
A Name You’re Proud of
Keep in mind that this is your business, so you should choose a name that you’re proud of, and that you enjoy sharing with potential customers. You should also make sure it sounds good when spoken aloud, and also looks good when written down.
Check whether your preferred name is available: Visit the Arkansas Corporation Database to check whether it is already in use. If it’s not unique enough, you may need to tweak it or come up with a new name altogether.
Reserve Your Name
The formation process can take some time so it can be a good idea to go ahead and reserve your corporation’s name. You can reserve your name with the Wyoming Secretary of State by filling out the Application for Reservation of Corporation Name. You can choose to file it online and pay a $22.50 fee, or send it by mail and pay a $25 fee. If you choose the paper application you can mail the application along with your check to 1401 W. Capitol, Suite 250, Little Rock, AR 72201.
If you’d like a closer look at how this process works, see our walkthrough guide.
Get Your Company URL
Even if you are not planning on building your website at this moment, it is a good idea to go ahead and register your URL. If you wait for the formation to be complete someone else could take it in the meantime.
GoDaddy can help you search for an available URL and build a website when you’re ready to launch online.
2) Select a Registered Agent
Arkansas corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation in step four.
Who can be my Registered Agent?
A registered agent must have a physical address within the state of Arkansas where mail and legal notices can be served during regular business hours. You can hire a service to act as your Registered Agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The Arkansas Secretary of State says that,
Some registered agents may choose to be filed as a commercial registered agent and comply with the Model Registered Agents Act (MoRAA) of 2007. A commercial registered agent can be either an individual or an entity and must list the following information with the Arkansas Secretary of State’s office: a) Name of individual or entity; b) Jurisdiction; c) physical and mailing address for service of process along with an additional means of accepting service.“
Our Recommendation: We recommend hiring a professional service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off the public record.
Guru Tip: You can get a free registered agent service when hiring a service like ZenBusiness or Incfile to incorporate online. Check out their reviews and how it works below.
3) Complete Your Articles Of Incorporation
This is THE document that formally registers your corporation with the state of Arkansas.
Keep in mind that you are acting as the incorporator when you fill out and submit the Articles of Incorporation. You should sign as the incorporator before submitting the document.
|Cost to File||$45 (online) or $50 (PDF)|
|Time to Complete Filing||2 business days|
|Agency||Arkansas Secretary of State|
|Mailing Address||Arkansas Secretary of State |
Business and Commercial Services Office
1401 W. Capitol Avenue, Suite 250
Little Rock, AR 72201
|Agency contact info for filing questions||501-682-3409|
4) Establish a Corporate Record
Corporations are required under Arkansas law to document and keep a permanent record of all important company decisions. Some things that are required to be kept in the corporate record include:
- Articles of incorporation and any amendments
- Resolutions by the board of director
- The last three years of shareholders written communications
- List of names, addresses, and contacts for the directors
- Most recent annual franchise tax report
- Shareholder list
The official corporate record may be kept at the corporation’s principal place of business, or stored in a safe location elsewhere. You should take the opportunity to set up a secure digital or physical location for storing company records as soon as possible.
5) Designate a Board of Directors
The incorporator is responsible for selecting the initial director(s) of the corporation. Unless initial directors were specified in the Articles of Incorporation, the incorporator should record initial director appointments in a signed document and file it to the corporate record. This document is known as the “incorporator’s statement.” A sample incorporators statement can be found here.
The initial directors (there is no specified minimum required by the state of Arkansas, but they must be specified in the Articles of Incorporation) will serve until new directors are elected at an annual shareholder meeting, or as otherwise indicated in the bylaws. The incorporator may serve as an initial director.
6) Create Corporate Bylaws
Corporate bylaws set out the rules and procedures for how the corporation will operate. Some important topics typically covered in the bylaws include:
- How shareholders will conduct votes
- The total number of directors and how each director will be elected
- How often the board of directors will meet
- The types of officer roles that will be appointed
- Procedures for resolving internal disputes
Bylaws are required in Arkansas
Bylaws help your business run smoothly, and are sometimes required by financial institutions for opening business bank accounts or acquiring loans.
Either the incorporator or the initial directors may prepare the company bylaws. The bylaws should be recorded in an internal company document, signed by the incorporator or a director, and filed to the corporate record. The bylaws are not filed with the state of Arkansas.
If you’d like a solid framework for creating corporate bylaws, there are plenty of services and free templates available online.
7) Hold First Board Meeting
After designating a board of directors and preparing bylaws, every corporation is legally required to call for an initial board meeting and to have an annual board meeting going forward. The incorporator often arranges and attends this first meeting. During the first board meeting, the initial directors should plan to cover the following topics:
- Review and approve corporate bylaws
- Designate officers to manage day-to-day business affairs
- Choose a bank
- Approve issuance of stock certificates
- Determine whether the company should elect to be taxed as a C corporation or S corporation (see step Nine for more details)
Recording Meeting Minutes: a detailed record of all key discussions and decisions during the board meeting should be prepared and distributed to all board members for their review and approval. This record is known as the “minutes”. A copy of the minutes should be sent to each director for review and filed in the company record.
8) Handle Tax Obligations
You’ll need a federal tax ID number (EIN) to operate a corporation in Arkansas. You can obtain your EIN from the IRS for free, and it’s a fairly painless and simple process. An EIN is required for your corporation to hire employees, file corporate taxes, open business bank accounts, and more.
A major decision for any corporation is determining whether to be taxed as a C corporation or an S corporation. Take a look at how these two formats differ:
- C Corp: The majority of corporations are C corporations, as they are subject to far fewer restrictions than S corps. With a C corp, profits are taxed at the corporate level, and again on the personal tax returns of the shareholders, resulting in what’s commonly referred to as double taxation.
- S Corp: This is only an option if your corporation has fewer than 100 shareholders, only issues one class of stock, is not owned by another business entity, and does not have any foreign shareholders. If your corporation meets these requirements, you can select the S corp’s pass-through taxation which eliminates the double taxation issue of C corps. S corp dividends are not taxable.
When it comes to state-level taxes, Arkansas levies several different types of taxes. All businesses in Arkansas are required to pay sales and use tax, income tax withholding tax, the corporate income tax, and unemployment insurance tax. All businesses in Arkansas are required to pay a Franchise Tax, the payment of which depends on the type of business entity. Click here to find the form for corporations and the right type of corporation.
Keep in mind that your city and/or county may have taxation requirements as well, so make sure to check with them to make sure you aren’t missing anything. Here’s some business resources for each of the largest cities in Arkansas:
9) Obtain Business Licenses and Permits
Arkansas does uphold the licensing requirements of any federally-regulated industries. Check here to determine if your business must be licensed by a federal agency. Arkansas also requires state licensure for certain industries beyond what is federally regulated.
Some of these industries include contractors, professional athletic trainers, dietetics, court reporters, and more. We recommend that every corporation owner search the professional licensing boards on Arkansas.gov to determine what industry licenses you’ll need.
Much like you should check to see if your local government has tax requirements, there’s also county-level occupational licenses that you may need to acquire. Reference our guide for any required permits or licenses.
10) Acquire Insurance
Arkansas requires that any business with 3 or more employees offer worker’s compensation insurance (with a few exceptions). This insurance will help protect your employees in the event of a work-related accident. You can read more about these requirements with the Arkansas Workers’ Compensation Commission.
The state of Arkansas does not require Commercial Liability Insurance, but it is a good idea to pursue general liability insurance. Arkansas is a modified comparative fault state, so an injured party will only receive compensation will only receive compensation if more than half of the fault lies with the other party. General liability insurance can help protect you and your business. You may also find it helpful to obtain industry-specific policies.
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
11) Open a Business Bank Account
To operate a corporation and receive the limited liability protection that comes with it, you have to keep your personal assets entirely separate from your business assets. Due to this requirement, it’s strongly advised that you acquire a business bank account for your corporation.
Failure to successfully keep your personal and business affairs separate could result in a court piercing the corporate veil and you being personally responsible for your corporation’s liabilities. If you need help finding the best business bank account check out our recommendations.
Get Help Forming a Corporation
The process of incorporating in any state can be a lengthy one. If you run into any trouble along the way, remember that there are plenty of organizations that can help you navigate the incorporation process.
Online Incorporation Services
If you would like to hire an affordable business incorporation service to create your corporation for you, services like ZenBusiness and Incfile can help you out. These service providers can handle most of the formation process, while still charging much lower rates than a business attorney’s fees.
There isn’t the same level of personalization that a lawyer can provide, but incorporation services can still be a tremendous help. The only major issue with these service providers is the fact that they can’t provide any actual legal advice, so you need to know what you want ahead of time.
Arkansas Business Attorney
There are some situations where hiring a business lawyer is a preferable route to using an online incorporation service. The corporation as a business structure can be highly complicated, and if you want to have the peace of mind that every single step was taken care of by a true expert, hiring a business attorney to form your Arkansas corporation is the way to go.
If you would like to pursue this route, there are some convenient services that can help you choose the right lawyer for your business. We like to use Avvo, which has extensive reviews and ratings for hundreds of Arkansas business lawyers, which can make it much easier to select an attorney who has your best interests in mind, and also has the expertise to get the job done right.