How to Start an S-Corp in Arkansas


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start an S-corporation in Arkansas

Arkansas, popularly known as The Natural State, offers a bunch of benefits for business owners, especially the state capital Little Rock has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Arkansas, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Arkansas. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Arkansas, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Arkansas. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Arkansas.

What is an S-Corp in Arkansas?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Arkansas. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

–LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Arkansas

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Arkansas.

How to Start an S-Corporation in Arkansas?

To create S-Corp in Arkansas, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Certificate of Organization, creating an operating agreement in Arkansas, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Arkansas

After you have decided on the idea to start an S-Corp in Arkansas, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Arkansas LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Arkansas.
  • Limit of restricted words that need a license in Arkansas, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Arkansas Registered Agent

The next step in starting an S-corp in Arkansas is hiring a Arkansas Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Arkansas. Forming an LLC and an S-corp will be easier if you have Registered Agent in Arkansas.

Step 3: File Your Arkansas Certificate of Organization

The Certificate of Organization is an important document to start your limited liability company (LLC). Arkansas Certificate of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Certificate of Organization” to be filed, you need to pay a filing fee to the state. In Arkansas, the filing fee is $50.

In California, along with the Certificate of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Arkansas

After you have filed your Certificate of Organization in Arkansas, the next step is to create an LLC operating agreement in Arkansas. The Arkansas LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Arkansas

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Arkansas can be through the following:

  • Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Arkansas

Once you have obtained your EIN and Certificate of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Arkansas, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Advantages of Starting an S-Corporation in Arkansas

Filing an S-Corp in Arkansas has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Arkansas apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corp in Arkansas?
An S-Corp in Arkansas is a type of business structure that is recognized by the state’s Secretary of State. It is similar to the traditional corporation structure with the added benefit of providing its owners with pass-through taxation.
What are the advantages of forming an S-Corp in Arkansas?
Forming an S-Corp in Arkansas offers advantages such as limited liability protection, pass-through taxation, and flexibility in management and ownership structure. It also allows for more generous deductions for health insurance and other benefits.
How do I form an S-Corp in Arkansas?
To form an S-Corp in Arkansas, you must file a Certificate of Formation with the Arkansas Secretary of State. This document must include the name of the corporation, its address, the name and address of the registered agent, and other necessary information.
What is the filing fee for forming an S-Corp in Arkansas?
The filing fee for forming an S-Corp in Arkansas varies depending on the type and size of the corporation. The fee ranges from $45 to $150.
How long does it take to form an S-Corp in Arkansas?
It typically takes between 1-2 weeks to form an S-Corp in Arkansas after the filing is completed.
Are there any requirements that must be met when forming an S-Corp in Arkansas?
Yes, there are several requirements that must be met when forming an S-Corp in Arkansas. These include filing a Certificate of Formation with the Secretary of State, selecting a registered agent, and obtaining a federal tax identification number.
Who can be a registered agent for an S-Corp in Arkansas?
A registered agent for an S-Corp in Arkansas must be an Arkansas resident or a business entity authorized to do business in the state.
What are the tax implications of forming an S-Corp in Arkansas?
An S-Corp in Arkansas is a pass-through entity, meaning the profits and losses are passed through to the shareholders and taxed on their individual tax returns. The business itself does not pay any tax.
What other documents must be filed when forming an S-Corp in Arkansas?
Along with the Certificate of Formation, an S-Corp in Arkansas must also submit Articles of Incorporation and Operating Agreement.
Are there any ongoing filing requirements for an S-Corp in Arkansas?
Yes, an S-Corp in Arkansas must file an annual report with the Secretary of State and pay any applicable taxes.
What is the deadline for filing an annual report for an S-Corp in Arkansas?
The deadline for filing an annual report for an S-Corp in Arkansas is June 30th of each year.
What are the penalties for not filing an annual report for an S-Corp in Arkansas?
The penalties for not filing an annual report for an S-Corp in Arkansas are a $50 late fee and potential dissolution of the corporation.
Are there any restrictions on the types of activities an S-Corp in Arkansas can engage in?
Yes, an S-Corp in Arkansas cannot engage in activities that are illegal or violate the state’s corporate laws.
Can an S-Corp in Arkansas issue stock?
Yes, an S-Corp in Arkansas can issue stock.
What are the requirements for issuing stock?
The requirements for issuing stock vary depending on the type of corporation and the state in which it is formed. In Arkansas, all corporations must be formed in accordance with the Arkansas Business Corporation Act.
How do I change the name of an S-Corp in Arkansas?
To change the name of an S-Corp in Arkansas, you must file a Certificate of Name Change with the Arkansas Secretary of State. The filing fee is $45.
How can I dissolve an S-Corp in Arkansas?
To dissolve an S-Corp in Arkansas, you must file Articles of Dissolution with the Arkansas Secretary of State. The filing fee is $45.
What are the penalties for not dissolving an S-Corp in Arkansas?
The penalties for not dissolving an S-Corp in Arkansas can include fines, penalties, and potential legal action.
Do I need to keep records for an S-Corp in Arkansas?
Yes, it is important to keep accurate and up-to-date records for an S-Corp in Arkansas. This includes tax records, financial statements, and other documents related to the business.
What type of insurance do I need for an S-Corp in Arkansas?
The type of insurance needed for an S-Corp in Arkansas depends on the type of business and the risks associated with it. Common types of insurance for small businesses include general liability, professional liability, and property damage insurance.
Are there any tax incentives for an S-Corp in Arkansas?
Yes, there are several tax incentives available for an S-Corp in Arkansas, including the Job Creation Tax Credit, the Residents’ Tax Credit, and the Business Investment Tax Credit.
What is the Arkansas minimum wage?
The Arkansas minimum wage is currently $9.25 per hour.
Are there any laws that apply to employees of an S-Corp in Arkansas?
Yes, all employees of an S-Corp in Arkansas must comply with state and federal laws, including those related to wages, hours worked, and workplace safety.
Are there any restrictions on foreign ownership of an S-Corp in Arkansas?
Yes, foreign ownership of an S-Corp in Arkansas is restricted to a maximum of 25%.
What are the requirements for shareholders of an S-Corp in Arkansas?
The requirements for shareholders of an S-Corp in Arkansas include a minimum of one shareholder, all shareholders must be 18 years of age or older, and all shareholders must be U.S. citizens or permanent residents.
Are there any restrictions on transferring shares of an S-Corp in Arkansas?
Yes, there are restrictions on transferring shares of an S-Corp in Arkansas. The transfer must be approved by the board of directors and abide by all applicable laws.
Are there any laws that apply to directors of an S-Corp in Arkansas?
Yes, all directors of an S-Corp in Arkansas must comply with state and federal laws, including those related to fiduciary duty and conflicts of interest.
What are the requirements for starting an S-Corp in Arkansas?
To start an S-Corp in Arkansas, you must file the appropriate documents with the Arkansas Secretary of State’s Office and pay the applicable filing fees. You must also have a registered agent in the state, provide an agreement of incorporation, and create and maintain corporate records.
Is there a minimum amount of capital required to start an S-Corp in Arkansas?
No, there is no minimum amount of capital required to start an S-Corp in Arkansas. However, you will need to provide information about the amount of capital you intend to contribute to the corporation.
How do I file the appropriate documents to start an S-Corp in Arkansas?
The documents needed to start an S-Corp in Arkansas are available on the Arkansas Secretary of State’s website. You may also need to provide additional documents depending on the type of business you are setting up.
Is an S-Corp in Arkansas subject to state taxes?
Yes, S-Corps in Arkansas are subject to state taxes, including income, franchise, and corporate income taxes.
Are there any ongoing requirements for an S-Corp in Arkansas?
Yes, S-Corps in Arkansas must file an annual report with the Arkansas Secretary of State’s office and pay any applicable taxes. The company must also adhere to all other Arkansas laws and regulations.
Is there a fee to start an S-Corp in Arkansas?
Yes, there is a filing fee that must be paid when filing the appropriate documents with the Arkansas Secretary of State’s office.

Also Read

Why Arkansas S Corporation is So Important

Arkansas S Corporations are a popular choice for small businesses because they offer a unique combination of limited liability protection and pass-through taxation. This means that owners of an S Corporation are not personally liable for the debts and liabilities of the business, protecting their personal assets from being at risk. At the same time, S Corporations are taxed as pass-through entities, meaning that profits and losses flow through the business to the owners’ individual tax returns. This allows for tax savings and can result in a more favorable tax treatment compared to other business structures.

Moreover, S Corporations are appealing because they allow for flexibility in the distribution of profits and losses among owners. Unlike other business structures where profits are distributed based on ownership percentage, S Corporations can distribute profits based on the specific needs and contributions of each owner. This can be especially beneficial for small businesses with partners who have varying financial needs or levels of involvement in the company.

Another key benefit of Arkansas S Corporations is the ability to easily transfer ownership. With S Corporations, ownership interests can be freely transferred without disrupting the business operations or incurring additional tax consequences. This can be advantageous for small businesses looking to bring in new investors or sell the company in the future.

In addition to the financial benefits, S Corporations also offer credibility and professionalism to small businesses. By electing to be an S Corporation, businesses signal to investors, customers, and partners that they are committed to compliance and transparent business practices. This can help attract new opportunities and build trust with stakeholders in the long run.

Furthermore, Arkansas S Corporations also have the advantage of reduced self-employment taxes. Owners of S Corporations are able to pay themselves a reasonable salary while maintaining the rest of their income as distributions, in turn reducing the amount of self-employment taxes they are required to pay. This can result in significant tax savings for small business owners and allow them to reinvest more money back into the business.

Overall, Arkansas S Corporations offer a unique combination of benefits that can help small businesses succeed in their industry. From limited liability protection and pass-through taxation to flexibility in profit distribution and reduced self-employment taxes, there are many advantages to choosing this business structure. Small business owners in Arkansas should carefully consider their options and consult with a legal or tax professional to determine if an S Corporation is the right choice for their business goals.

Conclusion

In conclusion, starting an S-corp in Arkansas is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Arkansas.

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