If you own a business as a sole proprietor in Arkansas, you might be asking if you have to pay franchise tax. No, is the response. In Arkansas, sole proprietors are not subject to franchise tax, unlike corporations and LLCs.
It is crucial to keep in mind that single proprietors are nonetheless accountable for paying additional taxes like income tax and sales tax. As a sole proprietor, you are required to use Schedule C (Form 1040) to include any business-related income and costs on your personal tax return. Any products or services that you sell in Arkansas are subject to sales tax as well.
The procedure usually takes 1-2 weeks if you choose to create an LLC in Arkansas. The Secretary of State will need that you submit Articles of Organization, pay a $50 filing fee, and choose a registered agent for your LLC. A registered agent is a person or organization that has the legal authority to accept correspondence on your LLC’s behalf. You can act as the registered agent yourself or by hiring a reputable agency. Speaking of registered agents, you do indeed require a registered agent in Arkansas for your LLC. As already indicated, a registered agent is tasked with receiving and transmitting legal correspondence on behalf of your LLC. By doing this, you can make sure that your LLC receives the required notice of any legal actions or lawsuits that might be brought against it.
The price of an Arkansas business license varies according to the city or county where your company is located. A business license may not be needed at all in some towns and counties, while others may levy a $25–$500 cost. To find out the requirements for your particular location, it is best to contact your local government.
In conclusion, while sole proprietors are exempt from paying franchise tax in Arkansas, they are still liable for other taxes including income tax and sales tax. You must choose a registered agent and the procedure to create an LLC in Arkansas usually takes 1-2 weeks. It is best to verify with your local government for precise criteria as the price of a business license in Arkansas varies depending on your area.
In Arkansas, sole proprietors are required to file an annual report with the Secretary of State’s office and pay the $800 franchise tax. The report can be submitted online or by mail, and there are two ways to pay the taxes: check or credit card. May 1st is the due date for both the annual report and the franchise tax.
In Arkansas, franchise owners must pay franchise taxes, which are calculated based on their net worth or the amount of money they have invested in the state, whichever is higher. For corporations, the franchise tax rate is 0.3%, whereas it is 0.6% for banks and savings and loans. Franchise owners could also be accountable for additional taxes like income tax, sales tax, and property tax.