Arkansas law requires corporations, LLCs, banks, and insurance companies registered in Arkansas to pay an annual franchise tax of $150. Failure to pay can result in fees, fines, penalties, and revocation of your business license. The franchise tax for LLCs in Arkansas is a “privilege tax.”
Purpose and Compliance
The purpose of this tax is to generate revenue for Arkansas. If an LLC does not pay franchise tax within three years, its status will be revoked. Most states require LLCs to file an annual report. In Arkansas, this is called the Annual Franchise Tax Report. It must be filed yearly for an LLC to stay compliant in Arkansas.
You can submit payment and file the annual franchise tax form as early as Jan. 1. Pay by check to the Arkansas Secretary of State or online through the business entity search page.
Domestic and foreign nonprofit corporations and charities must also file annual reports in Arkansas. Franchise taxes continue to accrue for revoked businesses until dissolution, withdrawal, or merger. Additional state filings will be prohibited if franchise taxes go unpaid.
Arkansas has a corporation franchise tax and a graduated corporate income tax. Depending on your company’s legal form, you might pay one, both, or neither. Sole proprietors pay taxes on business income through their personal returns.
Filing Requirements for LLCs and PLLCs
LLCs and PLLCs must file an Annual Franchise Tax Report and pay $150 each year. The Secretary of State requests business name and address. According to Section 26-54-104, all Arkansas LLCs must file this report and pay $150 regardless of income or activity. There is no other annual report.
Additional Information
The franchise tax rate is generally based on the business’s size and type. For example, a small business may be taxed at 0.5%, while a large corporation at 2%. The tax is generally due annually but can be required quarterly or monthly depending on revenue. Businesses that fail to pay may face interest and penalties.
Stay informed on Arkansas regulations to protect your business and avoid penalties. If you have questions, let us know.