Annual Franchise Tax Statement
You must submit a yearly franchise tax report for your LLC with the state of Arkansas. The study is linked to the state’s franchise tax, which applies to the majority of LLCs. The tax is $150, payable to the Secretary of State. You may submit the yearly franchise tax report online or obtain a report form from the SOS website. Every year, the franchise tax report, including the $150 tax payment, is due by May 1. There are fines for late reporting.
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State Corporation Tax
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay federal income taxes by default; only its members do. As previously stated, Arkansas charges a $150 franchise fee on LLCs for the right of conducting business in the state.
In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Arkansas, like practically every other state, taxes corporate revenue. The company income tax in the state is determined using a modest series of marginal rates applied to net income. The tax is due to the Department of Finance and Administration of the state (DFA). To pay the tax, use the state’s company income tax return (usually Form AR1000-CT).
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) However, Arkansas employers must additionally pay state taxes.
To begin, you must withhold and pay employee income taxes to the DFA. Begin by registering your company with the DFA, either online or in print form (Form AR-1R, Combined Business Tax Registration Form). After you register, you must submit withholding taxes on a monthly basis. Form 941M may be used for this purpose. Each year, you’ll also need to utilize Form ARW-3 to balance your LLC’s tax withholding. Check out the DFA website for further information, including on online filings.
You’ll also need to register to pay state unemployment insurance (UI) taxes. The Arkansas Department of Workforce Services is in charge of these taxes (DWS). These taxes may be registered for online or by utilizing Form DWS-ARK-201. Then, each quarter, utilize Forms DWS-ARK-209B and DWS-ARK-209C to record your earnings and pay your unemployment insurance taxes. Visit the DWS website for further information, including on online filings.
Taxes on Sales and Use
If your LLC sells items to Arkansas consumers, you must collect and remit sales tax. This implies you must register with the Department of Finance and Administration for this purpose and then make periodic sales tax payments for products sold. You may register either online or by mailing Form AR-1R. After you register, you will get a sales tax permit. The DFA will then need you to file sales tax returns on a regular basis (for example, monthly). The state recommends that you file electronically, although hardcopy forms are available upon request.
Other States Registration
If you want to do business in states other than Arkansas, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.