LLC Annual Report and Tax Filing Requirements in Arkansas

If you've started a limited liability company (LLC), you might already be aware of some of the maintenance requirements associated with running an LLC. For Arkansas LLCs, you need to file an annual franchise tax report and pay the associated tax. Your LLC might also be responsible for other business and employer taxes.

Here, we go over the most important ongoing reporting and state tax filing requirements for LLCs in Arkansas. (If you need information about other states' LLC requirements, see our LLC tax and filing requirements article.)

Arkansas LLC Annual Franchise Tax Report

Arkansas requires all LLCs to file an annual franchise tax report with the Arkansas Secretary of State (SOS). The report is associated with the state's franchise tax that applies to most LLCs. You can file your annual franchise tax report either:

• online through the State Franchise Tax and Annual Report Filing System, or
• by mail by filling out a paper copy of the form.

As of 2024, the franchise tax is $150 for LLCs. The franchise tax report, including the $150 tax payment, is due each year by May 1. There are penalties for late reports.

State Business Taxes in Arkansas

Most LLCs are considered "pass-through tax entities" for income tax purposes. Specifically, by default, multi-member LLCs are taxed as partnerships, and single-member LLCs are taxed as disregarded entities. As a pass-through entity, an LLC passes the responsibility for paying income taxes to its LLC members. The LLC doesn't pay taxes on its income. Instead, LLC members pay taxes on their share of the LLC's income on their personal tax returns.

You'll file and pay your personal and business taxes with the Arkansas Department of Finance and Administration (DFA). You can register your LLC through the Arkansas Taxpayer Access Point (ATAP) to file returns and pay taxes online.

Might pay an annual franchise tax. As mentioned above, Arkansas imposes an annual $150 franchise tax on most LLCs for the privilege of doing business in the state.

Electing corporate tax status. Typically, LLCs are taxed as partnerships (a type of PTE) by default. However, you can choose to have your LLC taxed as a corporation for federal tax purposes by filing IRS Form 2553 with the IRS. If you elect to have your LLC taxed as a corporation with the IRS, your LLC will also be taxed as a corporation in Arkansas and you'll need to pay the state's corporation income tax. Arkansas's corporation income tax is calculated based on a small series of marginal rates applied to net income. Use the state's corporation income tax return (Form AR1000-CT) to pay the tax.

Electing to pay the pass-through entity tax (PET). Many states, including Arkansas, are now allowing pass-through entities to pay income tax on behalf of their owners. Pass-through entities include partnerships, S corporations, and LLCs taxed as partnerships or S corporations as well as single-member LLCs. You can elect to have your Arkansas LLC pay the PET on behalf of its LLC members by filing Form AR362 every year that you wish to make the election. The PTE tax rate is equal to Arkansas's highest individual income tax rate. You can get more details on the PTE section of the DFA website, including answers to frequently asked questions.

If your LLC has members who aren't residents of Arkansas, then you generally have three options. You can either:

• withhold the nonresident member's income
• file a composite return to pay income tax on behalf of the nonresident member, or
• make the PET election and pay income tax on behalf of all LLC members (regardless of their residency).

Refer to the DFA's chart of pass-through entity member withholding to determine the steps you need to take if this situation applies to your LLC.

Arkansas Employer Taxes

Does your LLC have employees or does it plan to? If so, your LLC must pay employer taxes to the federal and state governments. If you haven't done so already, make sure you get an employer identification number (EIN) from the IRS so you can report and pay these taxes as an employer.

Withholding employee wages. As an Arkansas employer, you must withhold and pay employee income taxes to the DFA. (Special exceptions apply to residents of Texarkana, Arkansas.) Register your business for withholding tax online through ATAP. Once you've registered your LLC, you'll need to file withholding taxes every month or year. You can use Form AR941M for this purpose. You'll also need to use Form ARW3 each year to reconcile your LLC's tax withholding. You can file and pay withholding tax via ATAP. For more information, visit the withholding tax branch section of the DFA website.

Unemployment insurance (UI) tax. In addition to withholding employee wages, you'll probably need to register to pay state UI taxes to the Arkansas Division of Workforce Services (ADWS). Unless exempt, you must register your LLC for a state unemployment account. You can apply for a DWS employer account number through the ADWS's Tax21 system. Each quarter, you must file quarterly wage reports either through the Tax21 system or on paper using some version of Form ARK-DWS-209B. Check out the DWS's section on UI information and services for employers for more details, including a link to the UI Employer Handbook.

Arkansas Sales and Use Tax

If your LLC will sell taxable goods or services to customers in Arkansas, you must collect and pay sales tax to the DFA. Register your LLC for a sales tax account through ATAP. As of 2024, you'll need to submit a $50 sales tax permit fee. Once your LLC is registered, you'll receive a sales tax permit from the DFA.

Depending on your annual tax liability, your LLC must file sales tax returns either monthly, quarterly, or annually. You can file your returns and make payments through ATAP.

For more, visit the sales and use tax section of the DFA website.

LLC Registration in Other States

Sometimes, owners organize their LLCs in one state but do business in another. For example, you might organize your LLC in Arkansas but do business in Texas. If you do business outside your home state, you might need to register as an out-of-state (foreign) LLC in the states where you have business activities.

Every state has rules and requirements for when an out-of-state business must register. But usually, you'll need to qualify as a foreign business if your LLC:

• has a physical presence in the state (such as an office, warehouse, or store)
• hires employees in the state, or
• solicits business in the state (such as by telephone, print ads, mail, or the internet).

You should check each relevant state's laws around qualifying as a foreign business. To learn more about individual state requirements, check out our state guide to qualifying to do business outside your state.

More Information About Arkansas LLCs

When looking for information about Arkansas LLCs, you should first check Arkansas's SOS and DFA websites. These state websites are great sources of information and guidance for small business owners. If you'd like more general guidance related to forming, managing, and operating your LLC, check out the articles in the LLC section of our website.

If you have questions about your Arkansas LLC's reporting and tax obligations, talk to an Arkansas business attorney or tax professional. They can help you determine which forms you must file with which department. A lawyer can also help you decide which tax election to make, if any.