Arkansas LLC
Advantages and Disadvantages



Arkansas LLC Advantages and Disadvantages



An Arkansas LLC offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like alimited partnership or a Subchapter S Corporation, are generally prime candidates for a business juststarting. The state of Arkansas gives public support to an Arkansas LLC.

Should I form a Arkansas LLC?

An Arkansas LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Arkansas to your LLC. Your Arkansas LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Arkansas LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.

Advantages and Disadvantages of a Arkansas LLC

Advantages of Limited Liability Company

  • Limited Liability: Owners of a LLC have the limited liability protection of a corporation.


  • Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.


  • No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.


  • Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.


Disadvantages of Limited Liability Company

  • Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.


  • Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.


  • Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.


By Arkansas and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Arkansas LLC members, the name and address of your Arkansas registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Arkansas LLC formation documents assembled for application to the state of Arkansas.



Arkansas' 2012 Business Tax Climate Ranks 31st

Arkansas ranks 31st in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.

Arkansas' State and Local Tax Burden Above National Average

Arkansas' 2009 state and local tax burden of 9.9% of income is just above the national average of 9.8%. Arkansas' tax burden has increased overall from 8.3% (46th nationally) in 1977 to 9.9% (14th nationally) in 2009. Arkansas taxpayers pay $3,281 per capita in state and local taxes.

Tax Freedom Day Arrives on April 3 in Arkansas

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Arkansas taxpayers work until April 3 to pay their total tax bill (ranked 35th nationally), 8 days before national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states were: Texas, April 7 (ranked 25th nationally); Oklahoma, April 2 (ranked 41st nationally); Missouri, April 4 (ranked 33rd nationally); Tennessee, March 27 (ranked 49th nationally); Mississippi, March 26 (ranked 50th nationally); and Louisiana, March 30 (ranked 47th nationally). Full study of Tax Freedom Day, nationwide and in each state

Arkansas' Corporate Income Tax System

Arkansas' corporate tax structure consists of six separate brackets with a top rate of 6.5% kicking in at an income level of $100,000. Among states levying corporate income taxes, Arkansas' top rate ranks 29th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) reached $120 per capita, which ranked 35th highest nationally.

The Facts on Arkansas' Tax Climate

Tax Freedom Day Arrives on April 3 in Arkansas Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2010, Arkansas taxpayers work until April 3 to pay their total tax bill (ranked 38th nationally), 5 days before national Tax Freedom Day (April 9). The Tax Freedom Days of neighboring states were: Texas, April 5 (ranked 32nd nationally); Oklahoma, April 6 (ranked 30th nationally); Missouri, April 4 (ranked 36th nationally); Tennessee, April 1 (ranked 44th nationally); Mississippi, March 28 (ranked 48th nationally); and Louisiana, March 26 (ranked 49th nationally).

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