Arkansas offers simple opportunities to start a sole proprietorship with no state filing fees. However, it’s important to understand the personal liability for all business debts that comes with it.
Steps to Start
To start your sole proprietorship, the following steps are recommended:
- Choose an idea
- Register a business name, if desired
- Obtain necessary licenses and permits
- Set up accounting systems
- File taxes with the state and federal government
Fictitious names in Arkansas are optional. If you need licenses and permits, the process may take 1-2 weeks and cost about $200. It’s possible to start without incurring any costs beyond your initial capital if no licenses are needed and no trade name is registered.
Taxation and Legal Requirements
As a sole proprietor, you must:
- Pay state and federal income taxes
- Possibly register for sales tax with the Revenue Department
- Keep detailed financial records
- Consider acquiring liability insurance to protect personal assets
If you choose to operate under a different name from your own, you can file a "Doing Business As" (DBA), also known as an Assumed Name Certificate, with your county clerk’s office.
Seek Professional Advice
Consulting with an accountant can clarify whether your business needs to register for sales tax or other state taxes. Additionally, an accountant can assist with tax preparations and ensuring compliance with all taxation requirements.