Arkansas Business License Basics

After you are ready to move forward with your business idea, the next phase in starting your company in Arkansas involves officially setting it up. In this stage, there are a number of important decisions and forms to submit, and while the registration procedure can appear complex, this module will outline the necessary actions to register your business in Arkansas properly.

Related: Starting A Business In Arkansas Checklist

Step 1: Choose a Business Structure

Selecting the right business structure is a crucial decision when starting a company in Arkansas. Your choice will impact various aspects of your business, including taxation, personal liability, and operational flexibility. Arkansas recognizes several business structures, each with its own advantages and considerations.

Related: Comparison of Business Structures

Sole proprietorship

A sole proprietorship is a business owned by one person. It is the simplest form of business structure, with no legal distinction between the owner and the business or paperwork to file with the state to create it. The owner has complete control over the business but is also personally liable for all debts and obligations.

Related: How to Start an Arkansas Sole Proprietorship

General Partnership

A general partnership is similar to a sole proprietorship, except there are two or more individuals operating a business together. No formal setup is needed, but it’s a great idea to draw up a partnership agreement to outline operations and responsibilities.

Related: What is a General Partnership?

Corporation

An Arkansas corporation is a legal entity separate from its owners, known as shareholders. It offers limited liability protection, meaning shareholders are not generally personally responsible for the corporation’s debts and liabilities. The downside is that corporations are the most complex structure to start, as holding annual meetings for directors and shareholders, taking minutes at the meetings, issuing stock certificates, and appointing a registered agent are required. 

Related: How to Form an Arkansas Corporation

Limited Liability Company (LLC)

An Arkansas LLC combines aspects of a sole proprietorship or partnership and a corporation. It provides limited liability protection to its owners, called members, shielding their personal assets from the company’s debts and liabilities. In addition, it has the most flexible management structure and tax options.

Related: How to Form an Arkansas Limited Liability Company

Step 2: Select a Business Name

Once the business structure has been finalized, the next step is to select the business name. The requirements and procedures vary depending on your business structure.

Sole Proprietorships and Partnerships

• If using a name different from the owner’s full name, register for an Arkansas Fictitious Business Name (also referred to as a Doing Business As (DBA) or Assumed Business Name.
• The name has to be unique in the county where the business is filing and can be searched at the County Clerk’s office (some have online access).
• File at the County Clerk’s Office where the business operates.
• Pay the one-time county filing fee.

Corporations and LLCs

• The business name is registered during entity formation.
• Every corporation and LLC filing in Arkansas must be unique or can’t closely resemble other registered names.  Before filing, do an Arkansas business name search to verify the name you want is available. 
• Corporation names must include “Corporation,” “Incorporated,” etc., or abbreviations.
• LLC names must contain “Limited Liability Company” or abbreviations.

Step 3: Federal Employer Identification Number (FEIN)

The Federal Employer Identification Number (FEIN), also known as a Federal Tax Identification Number, is a unique nine-digit number the Internal Revenue Service (IRS) assigns to businesses. It functions similarly to a Social Security number for individuals and is primarily used for tax filing and reporting purposes.

Not every business needs to apply for a FEIN. Here’s a general guideline:

Must Apply:

• All businesses with employees
• Corporations
• Partnerships
• Most Limited Liability Companies (LLCs)

May Not Need to Apply:

• Sole proprietorships with no employees
• Single-member LLCs with no employees (can use the owner’s Social Security number)

To apply for an EIN at no cost, visit the IRS website.

Step 4: Arkansas Sales Tax Permit

Arkansas does not require a general state business license, but there is one common state registration. Businesses selling products or offering certain services must register for an Arkansas Sales Tax Permit under the Arkansas Gross Receipts Tax Law, which is administered by the Department of Finance and Administration (DFA).

Who Needs to Register:

• Retailers selling tangible personal property
• Businesses providing certain services
• Out-of-state sellers with economic nexus in Arkansas

Registration Process:

• There is no fee for obtaining the permit
• Apply online through the Arkansas Taxpayer Access Point (ATAP) or submit Form AR-1R
• Provide business information (name, address, FEIN/SSN, business description)

Step 5: Resale Certificate

After registering for a Sales Tax Permit, many Arkansas businesses benefit from obtaining an Arkansas Sales Tax Exemption Certificate, also known as a Resale Certificate. This document allows businesses to purchase inventory or materials without paying sales tax, provided these items are intended for resale to customers.

Step 6: City Business Licenses

While Arkansas does not require a general statewide business license, local jurisdictions often impose their own licensing requirements. The specific rules for business registration and licensing can vary based on your business location and the nature of your operations.

Some examples include:

• Little Rock: Requires a business license for most commercial activities within city limits.
• Fayetteville: All businesses within the city limits of Fayetteville will need to obtain a business license within 60 days of starting.
• Fort Smith: Requires businesses to obtain a license and may require additional permits depending on the nature of the business.
• Springdale: Businesses operating within city limits require a Springdale Business License.
• Jonesboro: The city requires a privilege license for businesses operating within city limits. Home-based businesses, including internet-based businesses, also need written approval from the Planning/Zoning office to operate in a residence.

Step 7: Occupational Licensing

Many occupations and professions in Arkansas require specific licenses or certifications before practitioners can legally offer their services.

Common Licensed Professions

• Healthcare: Doctors, Nurses, Pharmacists
• Legal: Attorneys
• Food Service: Restaurant Managers, Food Handlers
• Financial: CPAs, Real Estate Agents
• Cosmetology: Barbers, Tattoo Artists
• Skilled Trades: Electricians, Plumbers
• Others: Teachers, Engineers, Home Inspectors, Landscape Contractors, Septic Tank Cleaners

For specific licensing requirements, fees, and additional information, consult the relevant Arkansas licensing board or visit the Arkansas Division of Workforce Services website.

Step 8: Local Building & Zoning Permits

When starting or operating a business in Arkansas, local building and zoning regulations are often important to consider. Requirements vary significantly between cities and counties, so always check with local authorities for specific rules.

Zoning Regulations: Most Arkansas cities and counties have zoning restrictions to regulate land use and development. In Little Rock, the Planning & Development Department oversees zoning, and businesses must comply with the City’s Land Use Ordinance.

Building Permits: Often required for construction, alteration, or significant repairs of business premises. For example, in Fayetteville, the Building Safety Division handles permits and inspections. Permit fees typically depend on the project’s value and scope.

Signage Permits: Most localities regulate business signage to maintain aesthetic standards and ensure safety. In Fort Smith, the Building Safety Department issues sign permits and has local ordinances for size restrictions, illumination rules, and placement guidelines.

Health Permits: Businesses involving food service, personal care, or certain health services often need additional permits. The Arkansas Department of Health oversees statewide regulations. However, food service inspections and permit issuance happen at the local level.

Special Considerations:

• Historic Districts: Cities like Hot Springs have additional regulations for businesses operating in historic areas.
• Entertainment Districts: Little Rock has designated entertainment districts with specific licensing requirements for alcohol sales and live events.
• Home-Based Businesses: Many cities, including Conway, have specific regulations for home-based businesses, often requiring a special use permit.